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CONTEMPORARY 
THEORIES OF UNEMPLOYMENT 

AND OF 

UNEMPLOYMENT RELIEF 



BY 



FKEDERICK C. MILLS, M. A. 

Sometime Garth Fellow in Economies 
Columbia University 



SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS 

FOR THE DEGREE OF DOCTOR OF PHILOSOPHY 

IN THE 

Faculty of Political Science 
Columbia University 



NEW YORK 
1917 



CONTEMPORARY 
THEORIES OF UNEMPLOYMENT 

AND OF 

UNEMPLOYMENT RELIEF 



BY 

FREDERICK C. MILLS, M. A. 

Sometime Garth Fellow in Economics 
Columbia University 



SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS 
FOR THE DEGREE OF DOCTOR OF PHILOSOPHY 

IN THE 

Faculty of Political Science 
Columbia University 



NEW YORK 
1917 






Copyright, 191 7 

BY 

FREDERICK C. MILLS 



Th?r 



o 



TO MY MOTHER 
LILY NIGHTINGALE MILLS 



PREFACE 

Certain explanations of the choice and arrangement 
of material in this monograph are necessary. 

The subject of unemployment is one which ramifies 
into many channels. An exhaustive survey of the field 
being impossible, the necessity of severely limiting the 
study to certain lines of investigation involved the neg- 
lect of other equally important phases of the question. 
So far as has been possible the work has been held 
strictly to a study of theories as to the causes of the 
modern phenomena of unemployment and as to the 
methods by which unemployment can be prevented or 
relieved. Facts concerning the extent of unemployment 
have been touched upon only where they have a bearing 
upon either of these two subjects. 

Though the paper has been prepared primarily to 
present present-day theories, its scope has been slightly 
enlarged so as to include, on the side of theory, a brief 
statement of the treatment of the subject of unemploy- 
ment by the classical economists, and, on the side of 
practical relief, as representing the working-out of cer- 
tain theories, a summary of the treatment of the able- 
bodied poor under the English Poor Law. A brief 
compendium of the course of tramp and vagrancy legis- 
lation in the various states of the United States is also 
included. It was felt that without some such foundation 
the study of contemporary theories would have been too 
far divorced from practical relief and from previous eco- 
nomic thought. 

7] 7 



8 PREFACE [8 

With the exception of some early study by Henry C. 
Carey, Francis A. Walker, Henry George and a few re- 
lief administrators, the subject of unemployment is one 
that has only recently attracted attention in the United 
States. The course of recent opinion in this country on 
this subject has been largely influenced by continental 
and, especially, by English thought. It is in the latter 
country that scientific method has been most effectively 
applied to the study of this problem. This exposition 
begins, accordingly, with a treatment of the development 
of English practice and of present English theories on 
the subject. 

The method adopted for the arrangement and presen- 
tation of the material involve the breaking-up of the 
complete theories advanced by the various writers in 
order to present their various views on each of the main 
theories that are held today. This arrangement sacri- 
fices the possibility of comparing the views of one au- 
thority, as a unified whole, with those of another ; but it 
makes possible the full presentation of each of the main 
types of theory without the repetition and disorganiza- 
tion that would result from the full statement, in chrono- 
logical order, of the complete program of each thinker 
considered. 

The definitions given to the term " unemployment " by 
the various authorities cited vary widely, some using it 
to cover merely the involuntary idleness of able-bodied 
workers, others cloaking under it all idleness, whatso- 
ever its cause or nature. The limiting extent to which 
certain authorities apply the term is indicated in the con- 
sideration of their theories. Throughout this paper, how- 
ever, unless otherwise noted, the term is used in a broad 
sense ; in the writer's opinion the vagrant and other 
types of " unemployables " are legitimate elements of the 



9 ] PREFACE g 

problem of unemployment, even though the social or 
industrial cause be one step further removed than in the 
case of the temporarily unemployed wage earner. 

The inclusion in the present paper of a study of French 
and German theories has not been possible. Important 
contributions to the subject have been made by conti- 
nental students and by continental practice. It is hoped 
that it will be possible to make such a survey at some 
time in the future. 

The writer desires gratefully to acknowledge his in- 
debtedness to those who have aided him in the prepara- 
tion of this monograph. Professors Carl C. Plehn and 
Jessica B. Peixotto of the University of California have 
given helpful advice and criticism. Sincere thanks are 
due Professor Henry R. Seager of Columbia University 
for valuable assistance in the revision of the manuscript 
and in the preparation of proof. To Professor Carleton 
H. Parker of the University of Washington the writer 
stands deeply obligated for the enthusiasm which he has 
contributed to the performance of this work. 



CONTENTS 



CHAPTER I 

PAGE 

The Development of English Unemployment Theory and 
Remedial Practice 

1. The Classical Economists on Unemployment 13 

2. The Able Bodied Under the English Poor Law 22 

3. The Unemployed Workman Act 31 

4. Board of Trade Labor Exchanges 36 

5. The National Insurance Act 38 

CHAPTER II 

Contemporary English Theories of Unemployment and of 
Unemployment Relief 

1 . Loss and Lack of Industrial Quality 42 

2. Proposed Remedies for Qualitative Maladjustments 52 

3. Industrial Fluctuations 59 

4. Proposed Remedies for Unemployment Resulting from Indus- 

trial Fluctuations «... 67 

5. The Labor Reserve 84 

6. Proposed Remedies for Underemployment 90 

7. The Personal Equation in the Problem of Unemployment. . . 100 

8. Proposed Remedies for Unemployment due to Personal Failings 104 

9. Unemployment Insurance 107 

10. The Relief of the Unemployed. . .* 113 

CHAPTER III 

The Development of American Unemployment Theory and 
Remedial Practice 

1. Miscellaneous Types of Early Theory 118 

2. The Early American Economists on Unemployment 124 

3. Methods of Practical Relief 127 

4. Tramp and Vagrancy Legislation in the United States 130 

11] II 



12 CONTENTS [ I2 

CHAPTER IV 

Contemporary American Theories of Unemployment and of 
Unemployment Relief 

PAGE 

1. General Statement 138 

2. The Relation of Immigration to Unemployment 146 

3. The Floating Laborer. 157 

CHAPTER V 
Conclusion , 163 

Appendix I. American Statistics on Unemployment 165 

Appendix II. References 170 



CHAPTER I 

The Development of English Unemployment 
Theory and Remedial Practice 

I. THE CLASSICAL ECONOMISTS ON UNEMPLOYMENT 

The period during which the classical system of eco- 
nomics of the Manchester School was being formulated 
was one characterized by distress from unemployment at 
least equally severe with any of more recent years. 1 Yet 
we find no exposition of unemployment as such. Cer- 
tain problems closely connected with that subject are 
discussed, but chief emphasis is usually placed upon an 
aspect other than that bearing upon the question under 
consideration. Thus the possibility of general over- 
production and " glut" is a favorite bone of controversy, 
but the point with which the economists are primarily 
concerned is whether profits could thus be reduced to 
zero, not whether the resulting flooding of the market 
would throw men out of work. However, there is a re- 

1 Sir Robert Giffen, in his inaugural address as President of the Royal 
Statistical Society in 1883, stated "... the poor are to some . . . 
extent, fewer, and those who remain poor are, individually, twice 
as well off on the average as they were fifty years ago." Quoted, 
Webb and Freeman, Seasonal Trades (London, 1912), p. 7. 

In Essays in Finance (second series), p. 379, Mr. Giffen writes: 
"... periodic starvation was in fact the condition of the masses of 
the working men throughout the Kingdom fifty years ago." Quoted, 
Seasonal Trades, p. 7. 

Cf. also "Distress of Laboring Classes since 1815." T. R. Mal- 
thus, Principles of Political Economy (Boston, 1821), p. 379, et seq. 
13] 13 



I4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I4 

lation more or less intimate between many of the modern 
theories and those set forth by the men of this school. 
A summarized statement of their views will pave the 
way for the presentation of later developments in this 
field. 

On the question of the irregularity of employment 
Adam Smith says the first and, so far as his followers in 
this school are concerned, the last word. As one of the 
five classic reasons for the inequalties of wages between 
different industries Smith includes relative constancy or 
inconstancy of employment. 1 The more inconstant the 
employment the higher will be the wage, for "What he 
earns . . . while he is employed, must not only maintain 
him while he is idle, but make him some compensation 
for those anxious and desponding moments which the 
thought of so precarious a situation must sometimes 
occasion." This principle is repeated by Smith's succes- 
sors for over one hundred years, practically unquestioned 
except by Senior, who disagrees as to the increased an- 
nual real wage. "But this evil (despondency because 
of precarious situation) is compensated, and in most dis- 
positions more than compensated, by the diminution of 
his toil. We believe, after all, that nothing is so much 
disliked as steady, regular labor; and that the oppor- 
tunities of idleness afforded by an occupation of irregular 
employment are so much more than an equivalent for its 
anxiety to reduce the wages of such occupations below 
the common average." 2 Senior contends, however, that 
the periods during which capital is unproductive must 
be compensated by a surplus profit when it is produc- 
tively used. 

1 Wealth of Nations, book i. chap. x. 

2 Nassau W. Senior, Political Economy (6th ed., London, 1872), pp. 
207-8. Also quoted in Seasonal Trades, p. 10. 



I5 ] DEVELOPMENT OF ENGLISH UNEMPLOYMENT I5 

Thomas R. Malthus, following Adam Smith, made 
two important contributions to the subject under con- 
sideration. His doctrine of population, at least as it 
was first enunciated, and as interpreted by later fol- 
lowers, exercised a vicious negative effect on the course 
of scientific study of the problems connected with desti- 
tution. The effect it had of completely overshadowing 
certain other doctrines advanced by Malthus in connec- 
tion with this same subject has been almost equally re- 
grettable. His theory of the pressure of population on 
the means of subsistence, the resulting destitution being 
merely one of the natural positive checks to an excess 
of numbers, is too well known to require detailing here. 1 
Unemployment, according to this view, is caused solely 
by an excess of workers, and can only be dealt with by 
allowing full play to the rigorous process of natural 
selection. " A man who is born into the world already 
possessed, if he cannot get subsistence from his parents 
on whom he has just demand, and if society do not want 
his labours, has no claim of right to the smallest portion 
of food, and, in fact, has no business to be where he is. 
At Nature's mighty feast there is no vacant cover for 
him. She tells him to be gone, and will quickly execute 
her own orders if he does not work upon the compas- 
sion of some of her guests/' 2 His theory is essentially 
one of surplus population. Malthus's doctrines were 
eagerly accepted by the upper classes, for they lifted 
from their shoulders not only responsibility for the con- 
dition of the poor, but also responsibility for active 
effort toward social improvement. 

Malthus' relation to unemployment theories does not 

1 For the theory in full see Malthus, An Essay on the Principles of 
Population (London, 1803). 
2 Ibid., p. 53. Quoted, Seasonal Trades, p. 11. 






j6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [j6 

end here, however. In his Principles of Political Econo- 
my? is included the earliest, most complete and most sym- 
pathetic treatment of the question of the unemployed that 
is found anywhere in the works of the economists of this 
school. In attempting to explain the distress of the labor- 
ing classes after 1815, he contends it to be due to the fact 
that capital, revenue, and the effective demand for pro- 
duce had been diminished by the wars, while the work- 
ing population was in excess of the demand, because of 
the many births during the preceding period, and the 
return of soldiers and sailors from the wars. He recom- 
mends as a remedy the employing of the working classes 
in unproductive labor, or at least in labor the results of 
which would not go for sale into the markets. The build- 
ing of public works and the improvement of grounds and 
hiring of servants by the wealthy are advocated. Stat- 
ing that " nothing can compensate the laboring class for 
a fall in the demand for labor," that "fluctuations al- 
ways bring more evil than good to the working classes/' 
he urges that it should be the object of government to 
maintain peace and an equable expenditure. 2 The pas- 
sage is noteworthy not only for the striking change in 
spirit since the earlier work, but for the recognition of 
the evil effects on the laboring class of industrial fluctu- 
ations, and for the recommendation of methods for re- 
lieving the distress due to unemployment. 

Malthus' treatment of overproduction is worthy of 
note because of the importance of that subject in later 
discussion. He argues the possibility of a real excess 
of goods over the quantity that could be consumed, 
though he does not show the possible connection be- 
tween overproduction and unemployment. 

l T. R. Malthus, Principles of Political Economy (Boston, 1821), 
p. 371 et seq. 
2 Ibid., p. 403. 



I7 ] DEVELOPMENT OF ENGLISH UNEMPLOYMENT iy 

Through the works of David Ricardo there are scat- 
tered references to subjects that are today looked upon 
as important factors in unemployment, but Ricardo does 
not develop them as such. The Malthusian doctrine of 
population is accepted in full. The maintenance of the 
poor out of public funds is severely condemned, the Poor 
Law of the day, which richly deserved censure, being 
sharply attacked. 1 An increase in population is looked 
upon not necessarily as causing unemployment, but as 
lowering wages below the natural price until the num- 
ber of the poor is reduced by misery so that wages 
can again rise. 2 A question that has long been at is- 
sue is touched upon by Ricardo in discussing the effects 
of the introduction of machinery. 3 He contends that 
the employment of machinery always leads to an in- 
crease in the net product of a country, but not neces- 
sarily to an increase in the gross product. As the power 
of employing labor depends on the latter, there very 
often results a diminution in the demand for labor, pop- 
ulation becomes redundant, and there is distress and 
poverty among the laboring class. Later economists 
took issue with Ricardo on this point. His general atti- 
tude on the question of relieving unemployment is shown 
where he endorses a statement that the great evil of the 
laborer's condition is poverty, resulting either from the 
scarcity of food or of work, but holds that the state 
should recognize the limitations of its power to remedy 
these conditions by legislation. 4 The same attitude is 
shown in another section where he argues that the dis- 
tress arising from a revulsion of trade is a necessary evil 

1 David Ricardo, Principles of Political Economy and Taxation 
(London 1881), p. 58. 
2 Ibid., p. 51. 3 Ibid., pp. 235-242. 

*Ibid., p. 58. (Footnote.) 



t8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ig 

to which a rich nation must submit. 1 This acceptance 
of the maladjustments of the industrial system and of the 
resulting misery as a necessary feature of that system is 
characteristic of the whole Manchester school. 

James Mill deals with none of the subjects connected 
with the problem of unemployment except in bringing 
forward the Malthusian theory of population in explain- 
ing wages. 

J. R. McCulloch, like his predecessors, attacks the 
Poor Law for its tendency to derange the natural relation 
between the supply of labor and the demand for it, 2 
shows the connection between population and fluctua- 
tions in wage rates, 3 and repeats verbatim Adam Smith's 
statements as to variations in wages due to irregularity 
of employment. 4 Of chief importance is his attempt to 
refute Ricardo's contention that the introduction of ma- 
chinery tends to reduce the demand for labor. McCul- 
loch holds that improvements in machinery may some- 
times force workmen to change their employments, but 
that they always increase the gross product, and therefore 
have no tendency to lessen the effective demand for labor. 5 

The works of Nassau Senior are notable for an appre- 
ciation of the problem of unemployment and a careful 
consideration of the causes of unemployment. In some 
of the points he makes he anticipates later thought. 
His disagreement with Adam Smith as to the distress 
occasioned by irregularity of employment, and his rather 
questionable conclusion as to the joys of that state of affairs 
have been noted. Of greater validity is his other reason- 

^icardo, op. cit., p. 161. 

J J. R. McCulloch, Principles of Political Economy (Edinburgh, 
1825), p. 355. 
z Ibid., p. 344, et seq. 4 Ibid., pp. 240-1. 

5 Ibid., pp. 175-188. 



IO J DEVELOPMENT OF ENGLISH UNEMPLOYMENT 79 

ing on the subject. To the development of manufactures 
and the division of labor is ascribed the phenomenon of 
unemployment. "Few principles are more clearly estab- 
lished," Senior writes/ "than that the productiveness of 
labor is in proportion to its subdivision, and that in pro- 
portion to that subdivision must be the occasional suf- 
fering from want of employment." Another point which 
Senior mentions is first made by him among the econo- 
mists ; that is, that unemployment is in part due to lack 
of mobility on the part of labor. " There can be no 
doubt that we have among our institutions and our 
habits much that fetters and misdirects the industry of 
our laborers ; and that these causes frequently occasion 
and always prolong the want of employment to which 
large portions of our laborers are frequently exposed." 2 
A striking illustration of the position of the modern 
worker is given by Senior. The savage, like one of his 
own instruments, is clumsy and inefficient but a complete 
self-sufficing unit in himself. The civilized man, like a 
single wheel in one of his large machines, is marvelously 
efficient when combined with others, but alone almost 
useless. 3 

In the works of the great " codifier " of the classical eco- 
nomists there is nothing new on the subject of unemploy- 
ment. John Stuart Mill accepts the Malthusian doctrine of 
population, 4 discussing it solely in its effect on wages, 
quotes Smith on the irregularity of employment as tending 

1 Nassau William Senior, Political Economy (London, 1872), p. 219. 

2 Ibid., p. 218. 

3 Ibid., p. 219. It is significant, in connection with these theories of 
Senior, that he was one of the members of the Royal Commission on 
the Poor Laws of 1834, the rigorous "Principles" of which still dom- 
inate English poor relief. 

4 J. S. Mill, Principles of Political Economy (New York, 1864; from 
5th London edition), p. 206. 



20 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 2 o 

to increase wages, 1 and follows McCulloch in denying 
Ricardo's contention that the conversion of circulating 
into fixed capital can injure the laboring classes in the 
aggregate, though admitting that temporary distress may 
result. 2 

J. E. Cairnes, in developing the theory of non-com- 
peting groups and in popularizing Senior's wage-fund 
doctrine, makes several points bearing upon the prob- 
lem. An increase in the amount of fixed capital at 
the expense of circulating capital will, at least for a time, 
have disastrous results in the development of pauperism, 
he contends, because of the curtailment of the wages 
fund involved in this change. 3 However, such a cur- 
tailment will not be a permanent one, since ". . . the 
true and only limit to the employment of labor is in- 
creasing cost of production. Increase the productive 
powers of industry, extend the knowledge of the indus- 
trial arts which support and comfort mankind, and there 
is little danger that laborers will ever fail of employment 
for want of work to do." 4 Cairnes thus holds with Mill 
and McCulloch that distress due to the introduction of 
machinery will be merely temporary, involving a neces- 
sary change in the distribution of labor, but not a falling- 
off in the total demand for labor. 

With Cairnes the line of immediate disciples of the 
Smith-Ricardo-Mill school of economists comes to an 
end. Their direct contributions to the study of the 
problem of unemployment were not many. The three 
outstanding ideas on the subject which they leave us are 
that unemployment is compensated by higher pay and 

'Mill, op. cit. t pp. 473-4. 

2 Ibid., pp. 130-6. 

3 J. E. Cairnes, Political Economy (New York, 1874), p. 179. 

*Ibid., pp. 257-8. 



2i ] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 2 I 

the opportunities for idleness, that it is due to a surplus 
population, and that it is a necessary concomitant of in- 
dustrial changes, and therefore merely temporary in 
character. Their study of the problem was not inten- 
sive. Engaged as they were in building up a science of 
political economy it could hardly be expected that they 
should exhaustively study one phase of the subject. Prop- 
agating, moreover, the idea of free enterprise and laissez 
faire in industry, they were not likely to emphasize a 
point at which the doctrine of absolutely unrestricted 
business enterprise broke down, in so far as the well-being 
of the working classes was concerned. It was on these 
grounds, in part, that Bagehot and Jevons and Toynbee, 
who followed Cairnes, broke away from the restrictions 
of the classical school. 1 

1 For a brief review of the attitude of the Manchester school toward 
the problem of unemployment, see a paper by Juliet S. Poyntz, included 
in Seasonal Trades by Webb and Freeman, (pp. 7-12). It is rather a 
severe criticism of the school from the standpoint of a Fabian Socialist 
than a fair review. 

W. M. Leiserson gives a good summary of the views of the early 
economists in an article in the Political Science Quarterly for March, 
1916 (vol. xxxi, no. 1, pp. 5-9). 

The views on the subject of unemployment of some of the lesser 
writers of the classical era, notably those of the Ricardian socialists, are 
worthy of exposition, but the scope of the present paper prohibits it. 

There is much that is suggestive of labor doctrines concerned with 
unemployment in the socialist writings of the nineteenth century, 
especially in the works of Karl Marx. Marx' analysis may be briefly 
summarized. 

With the advance of accumulation the proportion of constant (fixed) 
to variable (circulating) capital changes. If it was originally 1:1, it now 
becomes successively 2:1, 3:1, 4:1, 5:1, 7:1, etc., so that, as the capital 
increases, instead of 1-2 of its total value, only 1-3, 1-4, 1-5, 1-6, 1-8 etc., 
is transformed into labor power. Since the demand for labor is deter- 
mined only by the variable constituent of capital, that demand falls 
progressively with the increase of the total capital. Capitalist accumu- 
lation, therefore, constantly produces a relatively redundant population 
of laborers— a surplus population. This surplus labor population forms 



22 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 2 2 
2. THE ABLE-BODIED UNDER THE ENGLISH POOR LAW 

While the problem of unemployment is one that must 
be approached from the standpoint of industry, rather 
than from the standpoint of the Poor Law or of charit- 

a disposable industrial reserve army. The course characteristic of 
modern industry, viz., a decennial cycle of periods of average activity, 
production at high pressure, crisis, and stagnation, depends on the 
constant formation, the greater or less absorption, and the reformation 
of the industrial reserve army, or surplus population. (In their turn 
the varying phases of the industrial cycle recruit the surplus population, 
and become one of the most energetic agents of its re-production). 
Moreover, on the possibility of throwing great masses of men suddenly 
on the decisive points without injury to the scale of production in other 
spheres, depends fluidity and transformability of capital. The whole 
form of the movement of modern industry depends, therefore, upon the 
constant transformation of a part of the laboring population into unem- 
ployed or half-employed hands. The over-work of the employed part 
of the working class swells the ranks of the reserve. Relative surplus- 
population is the pivot upon which the law of demand and supply of labor 
works. 

The relative surplus population exists in every possible form. Every 
laborer belongs to it during the time when he is only partially employed 
or wholly unemployed. There are, however, three general forms — the 
floating, the latent, and the stagnant. The floating surplus population 
is found in the centres of modern industry, among the laborers who, 
repelled and then attracted, are swayed by the expansions, contractions 
and shiftings of production. It is constantly augmented by the boys 
who were employed up to maturity and then turned out, for capitalistic 
production wants constantly larger numbers of youthful laborers, smaller 
numbers of adults. Of its members, also, are the thousands who are 
always out of work, even when there is a complaint of the want of 
hands, because the division of labor chains them to a particular branch 
of industry. The latent surplus population exists in the rural districts, 
where capitalistic production, having taken possession of agriculture, 
has forced out a part of the agricultural population. This excess is there- 
fore constantly on the point of passing over into an urban or man- 
ufacturing proletariat, and on the lookout for circumstances favorable 
to this transformation. The third category of the relative surplus pop- 
ulation, the stagnant, is that part of the active labor army which is 
characterized by extremely irregular employment, furnishing to capital 
an inexhaustible reservoir of disposable labor power. It recruits itself 
constantly from supernumerary forces of modern industry and agricul- 



23] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 23 

able administration, it is yet necessary to understand the 
attitude which the Poor Law administrators have taken 
in order to view in the proper perspective modern 
theories and remedies. 

Previous to 1834 the Poor Law passed through three 
distinct periods, the division into periods being based 
upon the principles dictating Poor Law practice. From 
early times the poor have been divided into two classes, 
those unable to earn a livelihood, and the able-bodied, 
the " sturdy rogues and vagabonds." It was with the 
second of these classes that the Poor Law was first con- 
cerned, the "deserving poor" being left to churches, 

ture, and especially from those decaying branches of industry where 
handicraft 'is yielding to manufacture, manufacture to machinery. 
There is, finally, the lowest sediment of the relative surplus population, 
the "dangerous" classes, those dwelling in the sphere of pauperism. 
It is pauperism which is the hospital of the active labor-army and the 
dead weight of the industrial reserve-army. Das Kapital, chap, xxv, 
sections 3-4, (London, 1901), pp. 642-664. 

Marx anticipated in this analysis many of the later theories as to the 
causes of unemployment, as will develop in later discussion. 

The reasoning of the other socialists of the day was rather more sup- 
erficial than that of Marx, though tinged with the same intense revolu- 
tionary flame. The principle of the right to work was probably first 
enunciated in France by Fourier and Considerant. Upon it was based 
the scheme of employing in public works all who were out of work, 
which was attempted in 1848 (the ateliers nationaux) . The matter of 
seasonal irregularity was first studied about the middle of the century 
by Louis Blanc, who gathered statistics from 1500 work-people in 830 
workshops in Paris, as to their daily wage and the number of months 
during which each was out of work during the year. Very early in the 
nineteenth century Robert Owen in England was earnestly working 
to relieve the distress due to unemployment, proposing state provision 
of work as a protection against the misery resulting from industrial 
fluctuations. With the exception of the contribution made by Marx, 
the chief element in which was the conception of a mobile army as a 
necessity in capitalistic production, there is nothing of exceptional value 
to present study in the works of the early socialists. Cf. Seasonal 
Trades, pp. 11-16. 



24 CONTEMPORARY THEORIES OF UNEMPLOYMENT [24 

guilds, and private charity. Up to the Act of Elizabeth 
in 1601 extremely harsh laws for the suppression of vag- 
abondage were in force. Under the Acts of 1388 and 
1405 gaol and stocks, with bread and water diet, were 
the mead of sturdy beggars. 1 The Act of 1531 made 
necessary licenses for begging ; he who was caught with- 
out a license was "to be beaten with whips till his body 
be bloody by reason of such beating." Scholars of Ox- 
ford and Cambridge begging without authorization under 
the seal of their universities were to be punished in the 
same way. The years 1547 and 1572 marked even more 
severe penalties. Branding, the enslavement of wives 
and children, and death were some of the punishments 
for "loitering, idle wanderers." The extreme severity 
of these laws of course prevented their strict enforcement. 2 
The second of the early periods is that beginning with 
the Act of Elizabeth in 1601. The dominant principles 
were, first, the relief of the lame, impotent, old, blind 
and other poor people not able to work, and, second, the 
setting to work of those having no ordinary or daily 
trade of life by which to get their living. Funds were 
to be provided by the practically compulsory taxation of 
every inhabitant. Every parish was solely responsible 
for its own poor. Laws of settlement were strictly en- 
forced under this act, to prevent the flocking of the poor 
to the parishes where they were best treated. 3 Parish 
poor houses first came into being during this period 

1 Cf. T. Mackay, The English Poor (London, 1889), pp. 112-116. 

2 Ibid., pp. 118-121. 

3 Such laws, however, were not originated at this time. Measures 
restricting the mobility of labor were enforced before the time of Wat 
Tyler during the reign of Richard II, and at varying intervals there- 
after. Cf. Mackay, op. cit., pp. 112-13. 



25] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 2 $ 

because of the need for a test to prevent promiscuous 
giving by local justices. 1 

In 1782, with the passage of Gilbert's Act, came the 
beginning of the form of poor-law relief to which 
Malthus and other of the early economists took such 
strong exception. The workhouse test was abandoned. 
All who were able and willing to work were to be pro- 
vided by the Poor Law Guardians with employment 
" suited to their capacity and near the place of their resi- 
dence." Moreover, they were " to be properly main- 
tained and provided for until such employment were 
secured," and the deficiencies of the earnings of such 
work, if not enough for maintenance, were to be made 
up to them. Striking evils ensued. Money and food 
were doled out liberally, often without a labor test. In 
one place an independent laborer, by hard work, could 
earn 12 shillings a week, while a pauper, for nominal 
work, received 16 shillings a week. In some places 
people were forced by law to employ and pay a number 
of laborers, the number being based upon the amount of 
their property. 2 The poor-rate assessment became very 
high with these heavy drains upon it. The evil effects 
of the system, in the degradation of the working classes, 
in the fostering of an inefficient laboring force, and in 
the encouragement it gave to an excessive growth of 
population have been widely advertised since the break- 
down of the old law. 3 In 1834, following the Report of 

X T. Mackay, Public Relief of the Poor (London, 1901). An interest- 
ing account of the economic background of the Act of Elizabeth is given 
on pp. 18-34. 

2 Instances taken from J. S. Nicholson, Principles of Political Eco- 
nomy (London, 1893), pp. 371-81. 

3 C/., Great Britain, Report of the Royal Commission on the Poor 
Law, (London, 1834), pp. 77-98. 

An especial problem which developed during this period was that of 



2 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 2 6 

the Royal Commission on the Poor Laws appointed to 
investigate these conditions, the Act of 1834 was passed. 

The Report of the Commission of 1834 and the laws 
passed to carry out the principles therein embodied deal 
chiefly with the able-bodied, for the evils of the pre- 
ceding period had grown up primarily around the system 
for relieving this class. In considering the Report it is 
necessary to remember that it came as a reaction against 
the former system of allowances, and in an age when the 
doctrine of laissez faire dominated the economists and 
the statesmen. That the principles it put forward were 
excessively severe upon the individual pauper or unem- 
ployed man is therefore not surprising. 

The dominating principle of the Report is that which 
is known as " less eligibility." " The first and most 
essential of all conditions is that his (*. <?., the individual 
relieved) situation on the whole shall not be made really 
or apparently so eligible as the situation of the indepen- 
dent laborer of the lowest class." x Two proposals for 
the actual administration of relief are based upon this 
general principle. 

1. That outdoor relief to the able-bodied and their 
families be discontinued (with certain minor excep- 
tions). 

the agricultural laborer. The decay of the yeomanry, which set in 
about 1760 with the enclosure of the commons and the displacement 
of home manufactures by the factory system, and the concomitant 
development of a proletarian class, gave rise to the most pressing of 
the problems the Poor Law adminstrators had to face. The whole 
question of agricultural conditions has been, and continues to be, an 
important factor in the problem of unemployment, both directly and 
indirectly through its relation to the influx of rural workers to the 
cities. It is admirably treated by Miss O. J. Dunlap, The Farm Lab- 
orer— -The History of a Modern Problem (London, 191 3). Cf. especi- 
ally in this connection, pp. 1-90. 
1 Report of the Royal Commission on the Poor Laws C1834), p. 228. 



27] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 2 y 

2. That relief be offered to able-bodied persons and 
their families only in well-regulated workhouses. 

The two fundamental principles, therefore, are those of 
"less eligibility" and of a" workhouse system." Added 
to these is a third, that of "national uniformity," a cen- 
tral administrative board being recommended. 1 It is 
important to note that the principle of "less eligibility" 
included the doctrines that those helped by the parish 
should work " as hard and for less wages than indepen- 
dent laborers work for individual employers," 2 and that 
the able-bodied be subjected to " such courses of labor 
and discipline as will repel the indolent and vicious." 3 

The most striking feature of the Poor Law Report of 
1834, at least from the point of view of the present study, 
is the fact that in a period when the number of " legiti- 
mately" unemployed and underemployed was excessively 
large, according to contemporary evidence as to indus- 
trial conditions, absolutely no distinction was made be- 
tween the unemployed man and the vagrant or pauper. 4 
The policy of rigorous deterrence was to be applied 
without discrimination to all who were in need of public 
assistance, no matter what the cause of their poverty 
might be. The key to this attitude is found in the 
theory as to the cause of unemployment which was held by 
the members of the Commission. The "surplus labor" 
theory had dominated previous relief systems, being the 
popular contemporary explanation of the phenomenon of 
unemployment. If there were more workers than there 
was work, it was held by those administering relief prior 
to 1834 that the community should take care of the 

1 Report of the Royal Commission on the Poor Laws (1834), p. 297. 
8 Ibid., p. 262. 3 Ibid., p. 307. 

i Cf. S. and B. Webb, Minority Report of the Poor Law Commis- 
sion (London, 1909), part ii, p. 3. 



2 g CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 2 8 

surplus. The whole policy of the Commission of 1834 
was based upon the belief that individual unemployment 
was due to individual faults, that ability and industry 
could always find a market. 1 In regard to the " surplus 
labor" theory, the Report states that even " after a sys- 
tem of administration, one of the most unquestionable 
effects of which is the encouragement and increase of 
improvident marriages among the laboring class, has 
prevailed in full vigor for nearly forty years " there is no 
real surplus in the kingdom as a whole. 2 

A recommendation which is of interest in its bearing 
upon unemployment relief, and which is somewhat incon- 
sistent with this denial of a labor surplus, is made by the 
Commission in empowering the vestry of each parish " to 
pay out of the poor rates the expenses of emigration of 
any persons having settlements within that parish who 
may be willing to emigrate." 3 This recommendation is 
explained by the statement that there may be a tempo- 
rary surplus of labor in certain districts. 

The scope of this paper prohibits a detailed description 
of the working-out of the principles of 1834 during the 
last eighty years. Nominally the principles still dictate 
the relief of all classes of destitute persons, with the ex- 
ception of certain classes of the unemployed who are 
provided for by the Unemployed Workman Act of 1905. 
In fact there have been various changes in practice since 
that time. Such of these as apply to the able-bodied 
may be briefly enumerated. 

The difficulty of enforcing the strict prohibition of out- 
door relief broke down that policy, except in certain 

l Cf., Great Britain, Report of Royal Commission on the Poor Laws 
and the Relief of Distress (London, 1909), part iv, chap. 9. 
2 Report of Poor Law Commissio?i of 1834, pp. 351-2. 
z Ibid., p. 351, et seq. 



2 g] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 2 g 

districts, even before it had ever been rigidly enforced. 
In 1842 an Outdoor Labor Test Order was promulgated, 
permitting the giving of work to able-bodied men at 
wages, under certain conditions and in certain parishes. 
In 1852 this order was embodied in the Outdoor Relief 
Regulation Order, which is still in force. The absolute 
prohibition of outdoor relief still applies, however, to 
some sections of England and Wales. 

The workhouse system, which was recommended by 
the Commission of 1834 for universal application to all 
able-bodied men seeking relief, is now applied universally 
to one class only, the wayfarers or vagrants, for whom 
a system of casual wards has grown up all over England. 
The General Workhouse Order of 1847, which provided 
that all able-bodied inmates of workhouses should do ten 
hours work in summer and nine in winter, each day, at 
such work as stone-breaking and oakum-picking r still 
applies to much of the work done in these casual wards. 
Compulsory detention for a certain period is prescribed 
in some districts for all who may apply. The policy of 
1834 in all its severity still governs these casual wards. 

The principle of "less eligibility " as a dominant 
factor has been broken down in practically all parts of 
Poor Law administration except that dealing with the 
vagrant class. Other types of the able-bodied have the 
opportunity either to secure outdoor relief with a labor 
test, or to secure employment at wages under a Distress 
Committee. 2 In both cases they are in a position rather 
more eligible than that of the lowest grade of manual 
worker. 

The most important single point of departure from 

1 Cf. Sidney and Beatrice Webb, English Poor Law Policy (Lon- 
don, 1909), pp. 74-5- 
2 Cf. infra ch. i, sec. 3. 



3 o CONTEMPORARY THEORIES OF UNEMPLOYMENT [30 

the principles of 1834, in so far as the question of unem- 
ployment is concerned, was that marked by the Circular 
of 1886 sent out by Joseph Chamberlain, then president 
of the Local Government Board. It is of supreme im- 
portance in its relation to all later unemployment relief 
in that it first makes an official distinction between 
" able-bodied destitution " and " able-bodied pauperism,'' 
marking the inauguration of " a policy of discrimination 
between some able-bodied applicants and others accord- 
ing to their character and circumstances with a view to 
the rehabilitation of the man really seeking work." 1 In 
the Circular and in his letters concerning it, Mr. Cham- 
berlain urged that the working men who were in distress 
because of the prevailing industrial depression be not 
familiarized with poor-law relief. The workhouse test 
and the labor test were to be upheld for the able-bodied 
pauper, but for the unemployed wage-earner different 
methods of relief were necessary. The Circular requested 
the local boards of guardians " to expedite as far as 
practicable the commencement of any public works 
which they may be contemplating, so that additional 
employment may be afforded." 2 Only once before, in the 
case of the Lancashire cotton famine, 1863-6, had such 
provision of public work for the unemployed been con- 
sidered. 3 It is to be noted that in first recommending 
this plan, Mr. Chamberlain advised that wages given on 
these works be somewhat below the normal level. 

The principle of discrimination between unemployed 
types, and that of providing work for the industrial un- 
employed, were endorsed by a special committee of the 
House of Commons in 1895, and furnished the basis for 

1 English Poor Law Policy, p. 172. 
2 Quoted, Ibid., p. 165. 
;s Ibid., pp. Q2-3. 



3 i ] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 3I 

Mr. Long's Unemployed Workman Act of 1905. The 
working-out of the principles will be briefly touched 
upon in describing that act, which provided new ma- 
chinery outside the Poor Law for caring for a large 
element of the unemployed. The casual ward, the labor 
yard, and the general mixed workhouse still remain 
under the Poor Law as agencies for caring for many 
types of unemployed men. 

Through all the history of the English Poor Law, 
with its swings from the side of haphazard and indiscrim- 
inate giving to that of rigorous and indiscriminate de- 
terrence and semi-penal and indiscriminate detention, 
there does not once appear a dictating policy based upon 
a scientific study of the able-bodied unemployed man, 
and upon a comprehension of the fact that there are 
many types and many causes for destitution. Rather 
does it rest upon unreasoned assumptions as to the 
causes for the existence of destitution. Perhaps the 
distinctive feature of poor-law policy until the time of 
Mr. Chamberlain was complete absence of discrimination. 
It was not until those in charge of poor-law relief began 
to discern the complexity of the causes of unemploy- 
ment, began to realize that the roots of unemployment 
lie outside the individual and within the industrial sys- 
tem itself, that progress began to be made. As yet, the 
conception of outside causes and the practice of discrim- 
ination in administration have been applied within a lim- 
ited sphere only. The Unemployed Workman Act of 
1905 represents an important step in the new direction. 

3. THE UNEMPLOYED WORKMAN ACT 

The Circular of 1886, which urged that unemployed 
workingmen be dealt with outside the Poor Law, through 
the provision of work at wages by the municipalities, 



32 CONTEMPORARY THEORIES OF UNEMPLOYMENT [32 

has been mentioned. From 1886 to 1905 this method 
was adopted more or less extensively by municipalties 
throughout the kingdom. The funds were largely raised 
by public subscription. Various difficulties, mentioned 
below, were encountered. In 1905 a plan based upon 
this general method of caring for the unemployed, but 
designed to do away with some of its faults, was put 
forward by Walter Long, then president of the Local 
Government Board, and was passed by Parliament as 
the Unemployed Workman Act. The main features of 
the Act were these : z 

1. Distress committees expressly for dealing with 
unemployment were to be established by every borough 
council in London, and by every council in other cities 
having a population in excess of 50,000. These distress 
committees were to be in no way connected with the 
Poor Law. 

2. The expenses of these committees were in part to 
be met by public subscription and in part provided out 
of the rates (the public money). 

3. Regular workers temporarily out of work, not 
casual laborers, were to be aided by the distress com- 
mittees, in any of the following ways : 

a. By assisting workers to emigrate or migrate. 

b. By the provision of temporary work (of actual 
and substantial utility, at a wage below the 
normal wage for unskilled labor). 

c. By the establishment of farm colonies. 

d. By the organization of a system of registering 
employers wanting workers and workers want- 
ing work (public labor exchanges). 

1 Report of Royal Commission on the Poor Laws, 1909, vol. i, pp. 
490-504. 



33] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 33 

The Unemployed Workman Act was designed to carry 
out Mr. Chamberlain's principle of discrimination, by 
selecting the " elite of the unemployed," the men from per- 
manent situations, and giving them the means for tempo- 
rary support while relieving them of the necessity of falling 
upon the Poor Law. In addition, its framers contem- 
plated a national system of information bureaus for dis- 
tributing the labor of the country. The whole system 
of relief under this act was made national in its scope 
in the hope of doing away with the haphazard, disunited 
methods that had characterized this method of relief 
when administered by the various municipalities. 

Brief reference may be made here to certain of the ill 
effects of the Unemployed Workman Act, and to certain 
of the respects in which the hopes of its proposers have 
not been realized. 

The labor exchanges contemplated by the Act were 
founded nowhere but in the city of London. There they 
met with a considerable degree of success, even though 
limited in their scope by the failure of other cities to 
establish co-operating branches, and formed the basis 
for the national system of exchanges established in 1909. 1 

The farm colonies established under the Act, especi- 
ally that at Hollesley Bay, were partially successful, in 
that those who were sent to these colonies were tempo- 
rarily helped. However, the relief given in this way was 
very costly, and had no lasting effect, those that were 
helped being allowed to lapse back into destitution after 
leaving the farms. 

The evils of the relief works that had been established 
by the various separate municipalities in accordance with 
Mr. Chamberlain's suggestions were in the main per- 

1 Cf. t infra, pp. 36-38. 



34 CONTEMPORARY THEORIES OF UNEMPLOYMENT [34 

petuated in the works started by the distress commit- 
tees. Complete discrimination, with the elimination of 
the confirmed casual was impossible ; thus to a very 
large proportion of the men helped the work given by 
the cities was nothing other than another casual job, 
which tended to continue, rather than stamp out the 
vicious system of casual employment. This evil was in- 
tensified by the fact that such a large number were 
registered in the periods of distress that each one could 
be given only a brief dole of work, which was of little 
material aid. The costs of the works carried on under 
this system were extravagantly high, because of the in- 
efficiency of many of the men in the class of work given 
them, and the disorganization of the working forces. 
Perhaps the worst evil that developed in connection 
with the public relief works was the forestalling of or- 
dinary work, the displacement of the regular workers by 
men of less efficiency from other trades. 1 

The majority of the Poor Law Commission of 1905-9 
considered the evils of the Unemployed Workman Act 
so far to outweigh its advantages that they recom- 
mended its discontinuance. The minority, however, 
contended that until a more adequate scheme for caring 
for the unemployed had been put into effect, the Unem- 
ployed Workman Act should be continued in operation. 

Notwithstanding the difficulties it encountered and 
the numerous evils that developed in connection with 
its operation, the Unemployed Workman Act undoubt- 
edly served an important purpose in sharply differentiat- 
ing the methods of caring for the unemployed, as such, 

1 For criticisms of the Act cf. Report of the Royal Commission on the 
Poor Law (1909), pp. 494-504. Also appendix to Report of Royal Com- 
mission, vol. xix. For a more favorable criticism, cf. the Minority 
Report (London, 1909), part ii, pp. 133-162. 



35] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 35 

from the ordinary methods of relieving pauperism, sick- 
ness and poverty, and in emphasizing the necessity of 
discrimination, even though in practice complete discrim- 
ination could not be secured. It set up the problem of 
unemployment as a separate problem, requiring separate 
study and treatment. On the problem itself, as Bever- 
idge points out, it has made no appreciable impression. 
Even in its failure, however, it performed the great 
service of demonstrating ". . . the inadequacy of all mea- 
sures which, like itself, leave industrial disorganization 
untouched and deal only with the resultant human 
suffering." * 

1 W. H. Beveridge, Unemployment: a Problem of Industry (Lon- 
don 1912), p. 191. 

Cf. pp. 162-191 for a careful criticism by a man who was closely in 
touch with the practical working out of the Unemployed Workman 
Act. 

Cf. also, Report to Legislature of the State of New York by the Com- 
mission to inquire into the Question of Employers' Liability and 
Other Matters. Third Report, Unemployment and Lack of Farm 
Labor (April 26, 1911), pp. 71-83. A very complete analysis, especially 
illuminating on the work of the farm colonies in England. On pp. 
130-3 of this same (N. Y.) report the text of the Unemployed Work- 
man Act is given. 

Mention should be made of another factor which has from time to 
time been of importance in the relief of the unemployed — that is, the 
work of voluntary agencies. The giving of charity of this type has 
been based upon the belief, on the part of the movers in the various 
schemes, that the Poor Law was inadequate for dealing with the able- 
bodied unemployed. This work has consisted either of the collection 
of emergency relief funds, to be dispensed with or without the require- 
ment of work, or of the establishment of shelters and labor homes. 
The most important instance of the direct dispensation of funds gathered 
in this way is that of the famous Mansion House Fund of 1885-6. 
Nearly ,£"80,000 was distributed in London during that winter, in a 
most haphazard and undiscriminating manner. "There are men still 
living among the unemployed of today who can recall with regret those 
golden days" (Beveridge, p. 158). The demoralizing effects of this 
"orgie of relief" were felt for years. In 1904-5 another Mansion 



36 CONTEMPORARY THEORIES OF UNEMPLOYMENT [36 
4. BOARD OF TRADE LABOR EXCHANGES 

Since 1905 there have been two important develop- 
ments in England in connection with -the problem of 
unemployment : the passing of the Labor Exchanges 
Act in 1909 and of the National Insurance Act in 191 1. 
Brief outlines of the essential features of these acts are 
given, as the measures have an important bearing upon 
the course of discussion concerning the problem being 
reviewed. 

The labor exchanges which were authorized to be 
established by the distress committees in the various 
municipalities of Great Britain, under the Unemployed 
Workman Act, were in fact put into operation only in 
London, where they met with a limited degree of suc- 
cess. In 1909 the government proposed a bill creating 
a national system of labor exchanges under the Board of 

House Fund was gathered. Farm colonies were established at Osea 
Island and Hadleigh, outside of London. In return for work done 
there by married men, who had previously been in regular employment, 
their families were given relief in London. Far more satisfactory re- 
sults were obtained. Similar funds were gathered at various times in 
other cities, being dispensed, in the main, in a way that did more harm 
than good. 

Such shelters as have been established by private parties have been 
under the control of the Salvation Army, the Church Army, and minor 
religious bodies. In most cases relief in these places is given without 
the exaction of work, there being thus a competition between lax, un- 
disciplined private shelters and harshly severe casual wards. The 
most notable accomplishment of religious bodies has been the establish- 
ment of fairly successful rural colonies in certain places. 

For descriptions of voluntary agencies for relieving the unemployed, 
see, Minority Report, Royal Commission on the Poor Laws, part ii, 
pp. 99-114; Report of Royal Commission on the Poor Laws, part vi, 
ch. 3, pp. 468-481 and Beveridge, op. cit., pp. 157-162. 

A very full description of the working of all agencies outside the 
Poor Law for dealing with unemployment is given in appendices, vol- 
umes 19, 19A and 19B to the Report of the Royal Commission on the 
Poor Laws containing the findings of Cyril Jackson and J. C. Pringle. 



37] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 37 

Trade. It was passed with practically no opposition. 
The chief provisions of the Act, 1 which is very brief, and 
of the code of regulations drawn up under the Act, are 
as follows : 

1. The Board of Trade may establish labor exchanges, 
and such other agencies as they think fit, for the collec- 
tion and furnishing of information as to employers re- 
quiring work-people and work-people seeking employ- 
ment. 

2. The power of establishing labor exchanges without 
the sanction of the Board of Trade is taken away from 
the distress committees. 

3. Local representative advisory committees, on which 
are representatives of both employers and workmen, may 
be appointed in each district to advise and assist the 
Board of Trade in the management of the district labor 
exchange. 

4. Neutrality in trade disputes is provided for. 

5. No fees are to be charged either to employers or 
workmen. 

6. Traveling expenses may be loaned to work-people 
traveling to employment found for them through a labor 
exchange. 

Provision was later made for the separate registration 
of juvenile applicants for employment, 2 and for close co- 
operation with the education authorities for the place- 
ment of juvenile workers. 3 The task of communicating 

1 Cf., Report on Unemployment, etc. (N. Y.), pp. 134-40, for the text 
of the Labor Exchanges Act, the regulations drawn up under it, and 
the schedules used by the labor bureaus. 

The text of the Act is also given in Beveridge— Appendix E, p. 279, 
et seq. 

2 Beveridge, pp. 289-90. 
% Ibid., pp. 285-8. 



38 CONTEMPORARY THEORIES OF UNEMPLOYMENT [38 

with parents and of advising young persons as to the 
work for which they are adapted is in the hands of the 
local education authority, while that of registering the 
actual applications for employment and bringing the 
applicants into touch with employers is, in the main, in 
the hands of the labor exchanges. Special voluntary 
advisory committees for juvenile work are provided for. 
The main characteristic of the labor exchanges being 
established under the Act is, in the words of the gen- 
eral manager of the system, that they are " national, indus- 
trial (not eleemosynary), free, voluntary, and impartial." z 

5. THE NATIONAL INSURANCE ACT 

In December, 191 1, the English National Insurance 
Bill 2 became a law. The Act went into operation on 
July 15, 1912, and the payment of benefits under it began 
on January 15, 1913. Provisions for sickness insurance 
and unemployment insurance are made by the Act. 
The chief provisions concerning the granting of unem- 
ployment insurance are as follows : 

1. Work-people (skilled or unskilled, organized or un- 
organized) in the following trades are compulsorily 
insured against unemployment : (a) Building; (b) Con- 
struction of works; (c) Mechanical Engineering ; (d) 
Shipbuilding; (e.) Ironfounding ; (f) Construction of 
vehicles; (g) Sawmilling. 

1 National Conference on the Prevention of Destitution; Papers and 
Proceedings (London, 191 1), p. 397. 

For discussions of the working of the labor exchanges cf. National 
Conference on Prevention of Destitution, pp. 215-72, 394-432. 

Beveridge, op. cit., pp. 291-306. 

Report on Unemployment, etc., (N. Y.), pp. 82-92. A careful and 
comprehensive though brief report on the English system. 

'For the text of the Act see David Lloyd George, The People 's In- 
surance (London, 191 1), pp. 144-160, 168-171. 

Cf. also, Beveridge, Appendix F, pp. 314-334. 



39] DEVELOPMENT OF ENGLISH UNEMPLOYMENT 39 

These trades are in the two main groups of building 
and engineering, the occupations which are most pre- 
carious, in that they are subject to very considerable 
seasonal and cyclical fluctuations. Lloyd George esti- 
mated that about one-sixth of the industrial population 
of England would be insured under the Act. 

2. The machinery of administration is made up of the 
previously existing labor exchanges, and the existing 
trade unions giving unemployment benefits. 

3. Compulsory contributions of 2jd. a week are paid 
by each workman and by employers for each employee 
during the period of employment. No contributions 
are required while the workman is unemployed. 

4. An amount equal to one-third of the total contri- 
butions from workmen and employers (one-fourth of 
the total) is to be paid into the fund by the state. 

5. Abatements amounting to over 50 per cent of their 
total contributions are allowed to employers who will 
insure their workmen for a year at a time. This large 
rebate is given in order to encourage employers to give 
their men regular employment, and to discourage casual 
employment. 

6. Benefits of seven shillings a week in the engineer- 
ing trades and six shilling's a week in the building trades 
for a maximum period of fifteen weeks of unemployment 
during any twelve months are provided for, subject to 
certain restrictions to prevent fraud and malingering. 

7. Trade unions in the compulsorily insured trades, 
which pay out-of-work benefits, will be repaid from the 
insurance funds that amount of their benefits which 
their members would have been entitled to draw had 
they received their insurance directly. 

8. Trade unions in other trades, which pay out-of- 
work benefits, may receive from the general insurance 



4 o CONTEMPORARY THEORIES OF UNEMPLOYMENT [40 

fund an amount equal to one-sixth of their disbursed 
benefits, provided that an amount not in excess of two 
shillings a week per unemployed member shall be paid 
to the unions from the general fund. This method of 
aiding voluntary unemployment insurance is one of the 
essential features of the Act. 

The inauguration of this system of unemployment in- 
surance is of such recent date that a judgment as to 
success would be premature. 1 

This brief resume of the National Insurance Act brings 
to an end the summary treatment of the theories and 
remedies of the past, with which it was thought advisable 
to introduce this monograph. Though an intensive treat- 
ment of the subjects considered has not been possible, the 
matter next to be taken up may perhaps be seen with 
a truer perspective because of this introduction. 

1 Lloyd George, The People' s Insurance , contains an interesting ac- 
count of the presentation of the bill to Parliament by Mr. George, and 
the arguments in favor of it. 

Beveridge, Appendix F, pp. 307-361, gives the regulations and sched- 
ules which have been drawn up in the administration of the measure. 

Sidney and Beatrice Webb, in The Prevention of Destitution (Lon- 
don, 1912), rather harshly criticise the original Insurance Bill. Their 
general discussion of insurance as a measure of relief is illuminating 
(pp. 158-220.) 



CHAPTER II 

Contemporary English Theories of Unemployment 
and of Unemployment Relief 

Many diverse theories have in the past been advanced 
and are held today as to the basic causes of the phe- 
nomenon of unemployment. Some of the past theories 
have been discarded with the advance of economic 
knowledge. On the contemporary theories varying de- 
grees of emphasis are placed by the different students of 
the problem. Few of them advance one exclusive cause, 
but few agree as to the relative importance of the sev- 
eral outstanding causes. To take up in chronological 
order, or otherwise, the complete scheme of each writer 
would involve a great deal of repetition and a consider- 
able degree of disorganization in the presentation of the 
problem. It is deemed best, therefore, to consider sep- 
arately each of the prominent group causes into which 
fall the many theories advanced. 

In the introductory chapter to his analysis of the 
problem of unemployment, 1 W. H. Beveridge emphasizes 
several fundamental considerations which are equally 
pertinent to the present exposition. The evil to be 
studied, he says, is that of "maladjustment between the 
supply of and the demand for labor." 2 His inquiry, 
therefore, is to be an economic one, not one made from 
the standpoint of charitable administration. In the 

1 Unemployment: A Problem of Industry (London, 1912). 
2 Ibid., p. 3. 

4i] . 41 



4 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [42 

second place, it is unemployment, not the unemployed, 
which must be studied, for " any one unemployed indi- 
vidual may represent the concurrence of many different 
forces, some industrial, some personal/' x These two 
general considerations will govern the present approach 
to the problem. 

What may be called the "orthodox" theories as to 
the causes of unemployment may be ranged under four 
main heads, to accept the classification set up by Bev- 
eridge, which is convenient for the present purpose. 
They are: the loss and lack of industrial quality; indus- 
trial fluctuations; the reserve of labor; and the personal 
factor. Certain theories {e. g., that of a labor-surplus) 
do not fall within this classification, being omitted be- 
cause not widely held today. Reference to some of these 
outlying theories is made below. 2 

I. LOSS AND LACK OF INDUSTRIAL QUALITY 

The ultimate problem of unemployment, as has been 
pointed out, is that of lack of adjustment between the 
supply of labor and the demand for labor. The present 
section deals with types of " qualitative maladjustment," 

1 Beveridge, op. cit., p. 3. 

2 It is perhaps unnecessary to state that in the present consideration 
of the different theories nothing but their broad outlines can be sketched. 
For the details of the different proposals, and for the technical points 
concerning the administration of the proposed relief measures, reference 
may be made to the authorities quoted. 

Attention should also be called to the fact that a very considerable 
re-alignment of the theories of most of the authorities dealt with will 
be necessary in order to bring them under the accepted classifica- 
tion, inasmuch as the methods of attacking the problem and of classify- 
ing its elements vary with each individual writer. 

The grouping accepted seems to be the best available. Its use will 
make for greater clearness and simplicity of presentation than would 
otherwise be possible. 



43 ] CONTEMPORARY ENGLISH THEORIES 43 

wherein the available supply of labor is not of the quality 
demanded by contemporary industrial needs. This mal- 
adaptation may be due to one of three causes. 

In the first place there may be changes in the char- 
acter of the demand for labor, "changes of industrial 
structure," due to the decay of particular industries, the 
introduction of new processes or of machinery, or to a 
regional shift in the location of an industry or a group 
of industries. 1 Controversies have raged since the days 
of the classicists as to the effect of such industrial 
changes on the condition of the laboring classes. The 
view held jointly by Ricardo 2 and Marx 3 that the use of 
machinery tended to displace labor has been mentioned. 
The general conclusion of the older economists, however, 
was that merely temporary distress would be caused by 
such changes, since the gross demand for labor would 
be increased by increased production. 4 This is also the 
general consensus of opinion among modern economists, 
though the relative degree of importance attached to it 
as a cause of unemployment varies widely. There is no 
controverting the fact that a new process may render a 
a skilled man's technical knowledge useless, 5 even while 
tending ultimately to increase the total produce of the 

l Cf. Beveridge, pp. 111-13. Cf. also J. A. Hobson, The Problem 
of the Unemployed (London, 1896), pp. 38-44. 

An illuminating description of " Increasing and Decreasing Trades," 
covering the period from 1861 to 1891 is given by Charles Booth in his 
Life and Labor of the People in London, vol. v, second series (vol. 
ix of the complete works), pp. 295-302. 

1 Supra, pp. 17-18. 

* Supra, pp. 21-23. 

4 Supra, p. 23. 

6 Cf. N. B. Dearie, Industrial Training (London, 1914), p. 352. 
Cf. also Minority Report part ii, pp. 167, 189-90. 



44 CONTEMPORARY THEORIES OF UNEMPLOYMENT [44 

country, and hence the demand for labor. 1 Beveridge is 
among those who contend that such changes are of little 
practical importance in affecting the volume of unem- 
ployment, 2 holding that these industrial reformations act 
very gradually in reducing the demand for any particular 
type of labor. The majority report, emphatically deny- 
ing a contraction in the gross demand for labor, yet 
urges the importance of the "social time-lag" as a cause 
of local and temporary unemployment. 3 The Webbs in 
their minority report class these changes as one of the 
important "frictions of industrial life" which are con- 
stantly turning steady men out of permanent situations, 
" men who for years have satisfied the demand for labor 
in one form and who may find the form suddenly 
changed ; their niche in industry broken up ; their hard- 
won skill superfluous in a new world ; themselves also 
superfluous unless they will and can learn fresh arts and 
find the way into unfamiliar occupations." 4 A similar 
argument is put forward by Mr. John Richardson in his 
testimony before the Poor Law Commission. 5 He holds 
that modern machine methods tend, in their ultimate 
effects, permanently to displace labor, as well as to re- 
duce the general level of skill and intelligence among 
workers. 

1 Cf. Great Britain, Report of Royal Commission on the Poor Laws, 
Appendix, vol. ix. pp. 202 — 3. An interrogation of Sidney Webb by 
Professor Smart concerning the effects of machinery and changing 
industrial processes gives rise to an illuminating exchange of opinions 
on the subject. 

2 Beveridge, pp. 113-17. 

3 Report of Royal Commission on the Poor Laws, part vi, ch. 1, pp. 
437-45- 

* Quoted, Minority Report, part ii, p. 168. Cf. also Prevention of 
Destitution, p. 95. 

5 Report of Royal Commission on the Poor Laws, appendix, vol. ix, 
pp. 252-3. 



45 ] CONTEMPORARY ENGLISH THEORIES 45 

A view midway between these diverse contentions is 
held by Hobson. The factor determining whether un- 
employment is to be increased or diminished by the 
introduction of machinery in a particular trade is the 
" elasticity of demand " for the product of that trade. 
If inelastic, workers will be displaced, but even in this 
case there need be no net reduction of employment, since 
the purchasing power released by the fall of price of a 
commodity will be turned in other directions. 1 

The requirement laid upon the modern working-man 
by this " changeability of the industrial process " is that 
of a degree of mobility and adaptability never exacted 
from his predecessors. On this point all agree, whether 
tending to minimize or exaggerate the importance of 
these changes. 2 

The second factor tending to bring about a loss of 
industrial quality is that of age. The worker who is 
growing old, who is losing his power to adapt himself 
to new conditions and new circumstances, is facing an 
industrial world which requires a constantly greater de- 
gree of adaptability. Extensive inquiries tend to prove 
that men are not turned out of their positions on account 
of old age any more frequently at present than has been 
the case in the past, 3 but that getting back into industry 
after middle age has been reached is becoming more 
difficult. Rather convincing evidence on this point is 
given by Rowntree and Lasker in the record of an in- 

*J. A. Hobson, The Industrial System (London, 1909), pp. 279- 
282. Cf. also, Hobson, Problem of the Unemployed, pp. 49-50. 

2 On this subject cf. Geoffrey Drage, The Unemployed (London, 
1894), pp. 127, 148-9; Percy Alden, The Unemployed (London, 1905), 
pp. 34, 66. Alden's book deals almost exclusively with proposed rem- 
edies, taking certain causes rather for granted. 

% Cf. Beveridge, pp. 117-24. 



4 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 4 g 

tensive study of unemployment in the town of York. 
For practically one-fourth (23.3^) of the regular workers 
unemployed at the time of their survey, age was the 
primary factor which rendered re-entry into industry 
difficult. 1 It is interesting to note that the one apparent 
exception to this general rule was found in the building 
trades, in which contractors evidently favored men above 
middle age. 2 A considerable difference of opinion exists 
as to whether the length of industrial life is increasing 
or diminishing. On the one hand it is held that the 
period of dependence has increased, because, with a 
lengthening actual life there has been no change in the 
length of the working life. 3 This is controverted, at 
least in its absolute form, by Beveridge, who shows by 
means of superannuation age figures that in certain trades 
the working life has increased. 4 The Webbs specifically 
deny that age is of increasing importance as a cause of 
the turning of men out of industry, holding, however, 
that age makes more difficult the mobility and adapta- 
bility required in the modern world. 5 

Third of the causes of maladjustment as to quality be- 
tween the supply of and the demand for labor is that of 

^owntree and Lasker, Unemployment: A Social Study (London, 
ion), pp. 52-4. 

2 Ibid., p. 148. 

3 C. J. Hamilton, " Unemployment in Relation to Age and Accident." 
In : Papers and Proceedings, National Conference on the Prevention of 
Destitution (191 1), pp. 460-6. 

4 Unemployment, pp. 122-3. 

5 Minority Report, part ii, pp. 224-30. 

A. C. Pigou, Unemployment (N. Y., 191 3), places age among the 
several causes conducing to maladjustment between wage rates and de- 
mand, and hence to unemployment. Cf. infra, pp. 48-49. 

Cf. also Testimony of Mr. John Richardson before the Poor Law 
Com., appendix, vol. ix, p. 253. 



47 ] CONTEMPORARY ENGLISH THEORIES 47 

deficiency of industrial training. This is placed by some 
as the ranking cause for the existence of unemployment, 
or, at least, as one of the most insidious and demoraliz- 
ing of the several causes. " We regard," says the Min- 
ority Report 0/ the Poor Law Commission, " this perpet- 
ual recruitment of the unemployable by tens of thousands 
of boys, who, through neglect to provide them with 
suitable industrial training, may almost be said to grad- 
uate into unemployment as a matter of course, as perhaps 
the gravest of all the grave facts that the Commission 
has laid bare." x 

The theory, in its broad form, is as follows : A charac- 
teristic feature of modern industry is the employment of 
juveniles not as learners but as wage-earners, 2 in occu- 
pations which they can retain only up to maturity, and 
which fail to prepare them for anything other than the 
lowest forms of unskilled work. These "blind alley" or 
"dead end" occupations are the breeding grounds for 
the low-grade casual type which forms the chief element 
in the underemployed and unemployable classes. That 
these classes are so recruited is clearly shown by the 
startlingly large precentage of youths applying to dis- 
tress committees. 3 Not only has lack of industrial train- 
ing characterized "blind alley" employments, but also 
vicious habituation to irregularity and often to im- 
morality. 4 

1 Quoted, Dearie, p. 416. 

2 Cf. supra, p. 21-23, note on Marx' theories. 
3 Minority Report, part ii, p. 220. 

4 E. g. the influence of the messenger service. 

Cf. Dearie, Industrial Training, pp. 360-452, for a very complete 
analysis of the '* blind alley " and its relation to the problem of unem- 
ployment. 

Cf. also Cyril Jackson, " Boy Labor", Royal Commission on the 
Poor Laws, appendix, vol. xx. 



48 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 4 g 

The opinion of the subscribers to the minority report 
as to the importance of this subject is clear from the 
above quotation. Again they state, " The mass of un- 
employment is continually being recruited by a stream 
of young men from industries which rely upon unskilled 
boy labor and turn it adrift at manhood without any gen- 
eral or special industrial qualification and — it will never 
be diminished until this stream is arrested." J Beveridge, 
however, while recognizing the deleterious effects of 
this system of juvenile employment, and considering it 
to be a vital factor in the determination of the incidence 
of unemployment, does not hold it be of extreme impor- 
tance in its effects upon the volume of unemployment. 2 
It does help to determine what individuals shall be 
among the casuals and the under-employed, but the mere 
elimination of that system " would not touch the causes 
of industrial fluctuation, or, in practice, prevent casual 
employment. ,,3 The reason, according to Beveridge, for 
the existence of a group of casual laborers is not the 
unfitness of certain men for steady work, but the pre- 
sence of a demand for that type of labor. The lack of 
industrial training facilitates but does not cause casual 
labor. 4 

From another point of view Professor A. C. Pigou 
advances a theory as to the relation of this " blind alley " 
training to unemployment. His general contention is 

1 Minority Report, part ii., p. 224. 

A vivid description of these conditions is given by Sidney Webb in 
the introduction to Juvenile Labor Exchanges and After Care, by 
A. Greenwood (London, 1911). 

2 Unemployment, pp. 125-32. 
3 Ibid., p. 131. 

4 For a discussion of the topic of the relation of casual employment 
to unemployment cf. infra, ch. ii, sec. 5. 



49] CONTEMPORARY ENGLISH THEORIES 49 

that " unemployment is wholly caused by maladjustment 
between wage rates and demand,'' his main thesis being 
that unemployment is due to an excess of the demanded 
wage rate above the competitive level which would 
normally be established where a given number of people 
of given degrees of efficiency are competing for work 
under a system of casual engagement. 1 Since payment 
cannot be adjusted to efficiency " an element of artifici- 
ality is introduced into the wage rate of second-grade 
work-people." 3 Especially is this true where, because 
of humanitarian ideas, a legal or customary minimum 
wage above the normal competitive level for inefficient 
workers is established. The creation of inefficient work- 
ers, therefore, through faulty industrial training, is a 
strong factor in bringing about a state of maladjustment 
between wage rates being paid and those rates normal 
to the number and relative efficiency of the workers. 
Pigou, in fact, places such emphasis on this factor (to- 
gether with that of personal disability), that he lays 
down this law : " The determinant upon which the aver- 
age amount of unemployment 3 depends is found in the 
number of work-people of the lowest grade, so ill- 
endowed by nature and education as to be incapable of 
really efficient work, that exist in any country, as com- 
pared with its general wealth." 4 

N. B. Dearie, writing with the experience of an inten- 
sive survey of industrial training in London, presents 
the problem in yet another light. The lack of industrial 

X A. C. Pigou, Unemployment, pp. 51-7. 
*Ibid., p. 63. 

3 Pigou uses the term unemployment as practically equivalent to "in- 
voluntary idleness," including time lost by persons working short time 
as well as by those doing no work; Unemployment, p. 242. 

*Ibid., pp. 66-7. 



5 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ 5 q 

training, according to his analysis, helps to determine 
the amount as well as the incidence of unemployment. 1 
The reason for this effect upon the amount of unemploy- 
ment is found in the possibility of " substitution of 
methods " in production. Employers adapt their meth- 
ods to the labor supply, doing their work with steady, 
skilled hands if they are available, or with a large num- 
ber of lower-grade irregularly employed workers, if they 
are to be obtained. Net profit to the employer is often 
the same, whether he turn out high-class goods or cheap 
low-grade goods, so the choice of method is in a sense 
immaterial to him, depending upon the available labor 
supply. 2 That labor which is the product of " blind 
alley" employment is peculiarly suited to the second 
type of production, with its greater amount of irregu- 
larity. There results, essentially because of the existence 
of "blind alleys," a greater amount of unemployment. 

A discussion of the reflex influence of unemployment 
upon industrial training is an important contribution 
which Dearie makes. 3 The relation of the supply of labor 
to the demand for it will determine whether the methods 
of production and of training are to be wasteful or other- 
wise. If there be a " defective demand " (*. e., one 
considerably short of the total labor supply) irregular 
methods of employment and bad methods of training 
will be resorted to. That such a defective demand has 
existed in England for years is proved, in Dearie's eyes, 
by the excessive waste of boy labor, and by the unneces- 
sarily huge reserves of labor maintained both in the 
skilled and unskilled trades. There is thus a vicious 
interaction between unemployment and faulty industrial 
training, each tending to perpetuate the other. 

1 Industrial Training, p. 418. 2 Ibid., pp. 418-20. 

3 Ibid., pp. 427-52. 



51 ] CONTEMPORARY ENGLISH THEORIES 51 

The majority of the Poor Law Commission hold that 
" the growth of large cities has brought with it an enor- 
mous increase in the (juvenile) occupations that are 
making directly for unemployment in the future." 1 In 
very comprehensive papers presented to that Commission, 
Reginald Bray 2 and Michael E. Sadler 3 put forward 
similar contentions, the former epigramatically stating 
that " No use at five-and-twenty is of more validity than 
too old at forty." 

Of the unemployed youths interviewed in the survey 
of York, the great majority had come from "blind alley" 
occupations. 4 

The most detailed study extant of the actual occupa- 
tions entered upon by boys leaving the elementary 
schools, with regard to the permanence and educative 
value of these occupations, was made by Cyril Jackson 
for the Royal Commission on the Poor Laws. 5 His 
survey convinced him of the difficulty boys find in secur- 
ing permanent work of a satisfactory character, and of 
the degenerating effect of the work they do get not only 
negatively in failing to train them, but positively in 
breaking down character and sense of responsibility. 6 

The question as to whether the lack of industrial train- 
ing merely causes certain individuals rather than others 
to be unemployed, or does actually increase the aggre- 

1 Report of Royal Commission on the Poor Laws, vol. i, p. 418. 

2 Ibid., appendix, vol. ix, pp. 315-29. 

3 Ibid., appendix, vol. ix, pp. 211-28. 

* Rowntree and Lasker, Unemployment, p. 9. 

This fact, of course, neither proves nor disproves the Beveridge con- 
tention that faulty training determines the incidence, not the volume, 
of unemployment. 

5 Appendix, vol. xx. 

6 Ibid., pp. 27-28. 



5 2 COXTEMPORARY THEORIES OF UNEMPLOYMENT [52 

gate amount of unemployment, is perhaps of academic 
rather than of practical interest, since even those who 
hold the former view admit that the evil facilitates casual 
employment, and should be eliminated. 

The three factors discussed in the present section, 
though technically differing in character, are all inter- 
related causes for qualitative maladjustment between the 
supply of and the demand for labor. Whether maladap- 
tation is due to an " objective change in the methods of 
production," a " subjective change brought by advancing 
years," or to original deficiencies in industrial training, 
there is the same ultimate evil to be dealt with. 

2. PROPOSED REMEDIES FOR QUALITATIVE 
MALADJUSTMENTS 

The inadvisability of attempting in any way to inter- 
fere with changes in industrial processes, because of their 
ultimate beneficial results, is admitted by practically all 
the authorities. Dearie does not sanction the methods 
of production, arising from a defective demand, which 
depend upon cheap, irregular labor, and hence would 
discourage that type of industrial change. However, he 
sees no method of preventing that particular evil except 
through an increasing demand for labor. 1 The conclu- 
sion, therefore, in regard to this first cause is that, in- 
dustrial changes being unavoidable, the remedy for 
resulting distress is to be found in community action to 
further mobility and adaptability on the part of its labor 
force. 

Beveridge conceives that the organization of the labor 
market, the bringing about of "organized fluidity of labor " 
through a national system of labor exchanges, would of 

1 Industrial Training, p. 452. 



53] CONTEMPORARY ENGLISH THEORIES 53 

itself largely settle this problem. 1 Guidance to new oc- 
cupations, not support, is requisite for men who have 
lost their established means of livelihood. The Webbs 
go somewhat further than this. The necessary adapta- 
bility, in their view, must be given by the state to those 
who are capable of resuming their places in industrial 
employment. Free training establishments with a strict 
curriculum of physical and industrial training, aiming at 
the " industrial over-hauling " of each individual ad- 
mitted, are earnestly advocated. 2 The majority of the 
Poor Law Commission also propose labor exchanges 
for assisting the mobility of labor, 3 and agricultural and 
industrial institutions for training the unemployed. 4 

A fact which is becoming of increasing importance in 
connection with the introduction of machinery, tending 
to lessen the resulting displacement of labor, is that 
modern machinery largely displaces other machinery. 
Less and less does it replace the handicraft arts, as it 
formerly did. So narrow has the field of handicraft be- 
come that future machine inventions will in all probability 
cause but a small fraction of the distress occasioned by 
the first inventions. From the tending of one machine 
the modern operator turns to the tending of another and 
more efficient machine. As a factor in unemployment, 
therefore, such mere mechanical changes appear to be 
becoming of minor consequence. 

1 Unemployment, pp. 210-11 ; cf. infra, ch. ii, sec. 6, for the discussion 
of labor exchanges. 

2 Minority Report, part ii, pp. 301-2. 

3 Report of Royal Com. on the Poor Law, vol. i, pp. 507-9. 

4 Ibid., p. 545. The general proposals concerned with unemployment 
insurance and assistance during periods of unemployment are relevant 
in this connection, but since they apply to all unemployment, whatever 
the cause, they will be treated separately. Cf. infra, ch. ii, sees. 9, 10. 



54 CONTEMPORARY THEORIES OF UNEMPLOYMENT [54 

Unemployment due to old age can at least in part be 
prevented through a labor-exchange system, which 
should aim to place older men in positions for which 
they are peculiarly fitted. 1 The aim of social policy, 
Beveridge asserts, is to keep age secure ; old men should 
therefore be given a marked preference in the filling of 
positions. Pigou, who sees a chief cure for unemploy- 
ment in the adjustment of payment to efficiency, urges a 
lower scale for older men, pointing out that in fact sev- 
eral trade unions not only permit but enforce this lower 
rate. 2 

Old-age pensions, though not established in England 
with any direct reference to the problem of unemploy- 
ment, have some bearing upon this question. The Old 
Age Pensions Act of 1908 provided that all persons over 
seventy years of age whose annual income did not ex- 
ceed thirty-one pounds, ten shillings, should receive 
weekly pensions from the government. The amount of 
the pension varies from five shillings to one shilling per 
week, according to the means of the pensioner. Certain 
disqualifications are provided for, but in the main the 
provisions of the Act are liberal. 3 

The most important element in this problem of con- 
forming the quality of the labor supply to the demand is 
that of eliminating the evil of "blind alley" employment, 
of ensuring to the youthful worker a training which shall 
fit him for steady occupation later in life. 4 Here again 

1 Ct. Beveridge, p. 211. ' Unemployment, pp. 61-2. 

'The text of the Act may be found in William A. Casson's pamphlet, 
Old Age Pensions Act (London, 1908), which gives, as well, the regu- 
lations made thereunder, and explanatory annotations. Old Age Pen- 
sions and the Aged Poor by Charles Booth (London, 1899), is still of 
value on this subject. 

*For a complete discussion of existing agencies designed to accom- 
plish this end, and the presentation of a careful program of future policy, 
cf. Dearie, Industrial Training, pp. 452-553. 



55] CONTEMPORARY ENGLISH THEORIES 55 

we must avoid a digression into controversies concern- 
ing technical methods, and merely outline a broad pro- 
gram, indicating one or two points of difference of 
opinion. 

There are two main phases to this question of youth- 
ful misfits — the organization of boy labor, and the reor- 
ganization of general education and industrial training. 1 
A beginning in the solution of the problem of organizing 
the boy labor market has been made in the establish- 
ment of juvenile labor exchanges, connected with the na- 
tional labor-exchange system and co-operating with the 
national educational authorities. 2 The building-up, 
however, of a thorough system of juvenile advisory com- 
mittees, of voluntary care committees, of juvenile trade 
boards, and of the various agencies by which children 
are to be advised and directed in their choice of occupa- 
tions, is, to a great extent, still to be consummated. 3 On 
the need for these all are agreed. Arthur Greenwood, 
in a valuable little book, 4 sums up the possibilities of re- 
form in the juvenile labor market. 

In regard to the necessary reorganization of general 
education, the majority Report sounds the keynote of a 
general complaint. That "... our school curriculum 
does not supply the right class of instruction and train- 
ing for industrial purposes/' that " . . . the atmosphere 
of our school life is (not) altogether congenial to a 
career of manual labor," and that as a consequence 
" clerical labor is a glut upon the market " while " high 
class artisans are at times obtained with difficulty" are 

1 Cf. Dearie, p. 528. 

2 Cf. supra, p. 37- 

3 Cf. Dearie, pp. 544"49- 

4 Juvenile Labor Exchanges and After Care (London, 1911). 



5 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [56 

some of the strong assertions made. 1 The majority lay 
down no direct program for reform, but urge the Board 
of Education " thoroughly to reconsider the curriculum, 
the aims, and the ideals of elementary education," en- 
dorsing in part the recommendations of their investiga- 
tor, Mr. Cyril Jackson. A school-leaving age of 15, 
with attendance until 16 of boys not properly employed, 
is specifically advocated, while a tentative recommenda- 
tion for universal military service is made. 2 Dearie, in 
this same connection, advises the development of manual 
training, general industrial and commercial training for 
the older boys, and 15 as the school-leaving age. 3 

The question as to the methods of giving the technical 
industrial training required is a bone of bitter contro- 
versy between the different English authorities. Best 
results are looked for by Dearie with a system of reor- 
ganized and supervised workshop apprenticeship, com- 
pulsory continuation schools being provided for boys 
under 18 not satisfactorily employed. Certain "blind 
alley" trades are to be eliminated, while the evil results 
of others are to be counteracted by supervision and con- 
nection with continuation schools. To accompany these 
reforms, the prohibition of excessive hours of labor and 
the restriction of night work by juveniles are advocated. 4 
The contentions of Professor Pigou are based upon his 
general analysis of the unemployment situation. He 
urges the discouragement of "blind alley" occupations 
and the provision of increased facilities for education 

1 Report of Royal Commission on the Poor Laws, vol. ii, p. 231. 

2 For Mr. Jackson's conclusions and recommendations [see appendix, 
vol. xx, to the Report of Royal Commission on the Poor Laws, pp. 
27-32. 

8 Industrial Training, p. 550. 
* Ibid., p. 55i- 



57] CONTEMPORARY ENGLISH THEORIES 57 

and training as measures which will tend to bring the 
general level of efficiency up to that which is worth the 
customary minimum wage, and which will thus tend to 
eliminate unemployment. 1 Rowntree and Lasker, with 
other suggested reforms, advocate the creation of com- 
pulsory schools giving technical and physical training to 
unemployed juveniles up to the age of 19. 2 

A contribution of great value to the study of the 
whole problem of child-work is made by Miss O. J. 
Dunlap and Richard B. Denman in their English Ap- 
prenticeship and Child Labor? Though not essentially 
an analysis of child labor as a factor in unemployment, 
it throws a flood of light on this phase of the subject, 
the historical study of the apprenticeship system and 
the changes in industrial method being strikingly illum- 
inating. Their findings in the latter regard, concerning 
industrial changes, lead them to a conclusion directly 
opposed to that of Dearie on the question of shop- 
apprenticeship. " The systematic enforcement of ap- 
prenticeship," they assert, "would be impossible under 
modern industrial conditions," 4 though they admit its 
limited applicability. Moreover, they allege that there is 
a real demand today for a great deal of low-skilled labor, 
so that the plan of giving all boys a technical training is 
absurd. 5 Every youth, however, needs protection from 
the evil of lack of educative qualities, and should be 
given the adaptability, initiative and physical well-being 
needed in any work he will do. For the attainment of 
this general training and for the improvement of juvenile 
working conditions four general proposals are made. 

iPigou, Unemployment, p. 243. 2 Unemployment , pp. 20-28. 

3 London, 1912. i f&id., p. 327. 

5 /did., pp. 330-1. 



5 8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [58 

The raising of school age, an adolescent part-time sys- 
tem, with compulsory continuation classes, the regula- 
tion of youthful employment out of school hours, and 
the creation of juvenile advisory committees to assist in 
the organization of the juvenile labor market are recom- 
mended as essential to the elimination of the evils of the 
present system. 1 

The subscribers to the Minority Report advance the 
most drastic scheme of any proposed. For the full un- 
derstanding of the plan it should be noted that they have 
in mind not only the good of the juveniles concerned 
but the necessity of finding industrial vacancies for the 
surplus labor resulting from the carrying-out of a pro- 
cess of "decasualization." 2 The chief points in the rec- 
ommendation are these: 3 

1. No boy under the age of 15 shall be employed in 
any occupation whatsoever. 

2. No youth under the age of 18 shall be employed for 
more than 30 hours a week. 

3. All youths between the ages of 15 and 18 shall 
attend a compulsory continuation school giving physical 
and industrial training 30 hours a week. 

W. H. Beveridge looks upon the problem of improv- 
ing the conditions of youthful labor as identical in prin- 
ciple with that of organizing the labor market, both be- 
ing methods of adjusting supply to demand. That 
industrial training can be looked upon as " the principle 
remedy for unemployment " is denied. 4 Technical edu- 

1 Cf. English Apprenticeship and Child Labor, pp. 309-50, for a very 
comprehensive treatment of the modern problem of juvenile labor, 
i Cf. infra, ch. ii, sec. 6. 
*Cf. Minority Report, part ii, pp. 268-75. 
4 Unemployment, p. 212. 



59] CONTEMPORARY ENGLISH THEORIES 59 

cation is endorsed only in so far as it can be guided by 
an accurate knowledge of industrial conditions, the ideal 
of teaching a trade to every youthful worker being con- 
demned. 1 The best contribution the educational system 
can make, Beveridge maintains, is the encouragement of 
adaptability, not the teaching of any particular trade. 
Primarily it must be through a better organization of 
the labor market, with an extension of labor-market or- 
ganization into the schools, that this type of maladjust- 
ment is to be remedied. 2 

3. INDUSTRIAL FLUCTUATIONS 

The second of the group-causes for unemployment is 
industrial fluctuations resulting in a changing demand 
for labor. These fluctuations are of two types — sea- 
sonal, in which the complete cycle of falling and in- 
creasing demand is completed within the period of one 
year, and cyclical, in which the change extends over a 
number of years. It is a characteristic feature of the 
first type that the variations in activity are trade varia- 
tions, usually affecting each trade or group of trades in 
a peculiar and distinctive manner and at a particular 
time. The cyclical fluctuations strike practically all 
trades alike, resulting in fairly uniform periods of activity 
and depression. 

The causes of seasonal fluctuations are not far to seek, 
nor is there any considerable difference of opinion con- 
cerning them. The root cause is, 'of course, climatic. 
That is the sole determinant of cultivating, sowing and 

1 Unemployment, p. 214. 

'/did., pp. 211-15. 

Reference to the necessity of reforming conditions of juvenile educa- 
tion and labor is made by Charles Booth in Life and Labor of the 
People in London, vol. v, second series (vol. ix of collected works). 
PP. 295-302. 



60 CONTEMPORARY THEORIES OF UNEMPLOYMENT [60 

harvesting periods in the agricultural industries, and of 
all the activities dependent upon these. Similarly, 
weather conditions affect directly building activities, and 
indirectly coal mining and gas manufacture, through 
their influence on demand. A directly derived cause is 
the " periodicity of social and economic activities. " l 
While usually these are immediately dependent upon 
climatic changes, there is a large number of cases in 
which mere custom, once seasonal periods exist, has 
maintained them after the original climatic necessity had 
disappeared. Thus wool sales take place six times a 
year in the British Isles on dates maintained by the force 
of custom alone. 2 The fluctuations of the " tyrannous and 
exacting demands of fashion " are similarly determined to 
a large extent by custom rather than by meteorological 
necessity. 

The widespread effect of this seasonality, influencing 
during the course of a single year the volume of output in 
practically every industry, has not been thoroughly appre- 
ciated. Its presence even in trades far removed from direct 
connection with weather conditions is due to the close in- 
terlocking of the elements of modern industry, irregularity 
in one trade ramifying with varying intensity through all 
those connected with it. 3 

Certain characteristics of seasonal fluctuations may be 
briefly referred to. Not only do they vary in time between 
different trades, but in regularity and range. Fluctuations 
in industries characterized by large-scale production are 
less marked than in those in which small-scale production 
prevails. 4 With the widening of a trade's industrial area, 

1 Webb, Seasonal Trades, p. 34. 

2 Cf. Beveridge, p. 34. 

3 Cf. Seasonal Trades, p. 37. 
'Ibid., p. 56. 



6i] CONTEMPORARY ENGLISH THEORIES 6 1 

both as regards sources of supply and markets, local fluc- 
tuations tend to neutralize each other, and the irregularity 
of the provincial stage tends to be lessened. 1 Seasonal irre- 
gularity, moreover, is not so marked in those industries in 
which the value of capital appliances is great 2 or in which 
the necessary labor is skilled and limited in supply. 3 In both 
these cases it is to the employer's advantage to regularize 
his work throughout the year. 

The relation of seasonal fluctuations to unemployment 
need not be extensively dwelt upon. A special committee 
of the Charity Organization Society, investigating unskilled 
labor, regarded the seasonal supply of commodities and the 
seasonal demand for commodities as two of the four chief 
causes of casual employment (i. e., employment for an hour 
or a day) which is one of the most pernicious factors in 
present-day unemployment. 4 Seasonality, with all other 
forms of irregularity of employment, tends to build up in 
each industry, and often for each employer, a reserve of 
labor — a " stagnant pool " — large enough to satisfy the 
total demand in the busiest season, and hence the source of 
unemployment and under-employment during the rest of 
the year. 5 That the existence of these reserves is encour- 
aged by employers for their own personal advantage is 
probably true in many cases. 6 The throwing out of work 
of skilled men by seasonal fluctuations is an obvious cause 
of distress, for normally men of this type are not in a posi- 
tion to pick up casual jobs during the off-seasons. Pro- 
posals for relieving the unemployment due to these annual 

1 Cf. Seasonal Trades, p. 55. 

2 Ibid., pp. 57-8. Cf. also Charity Organization Society, Report of 
Special Committee on Unskilled Labor (London, 1908), pp. 5-6. 

3 Ibid., p. 6. 'Ibid., p. 4. 

5 Cf. infra, pp. 84-88. 

6 Cf. Seasonal Trades, p. 60. 



62 CONTEMPORARY THEORIES OF UNEMPLOYMENT [62 

changes in the activity of different industries are dealt with 
at the end of this section. 1 

Fluctuations in business and industrial activity have char- 
acterized the course of economic history since the beginning 
of the nineteenth century. In the wake of the depressions 
accompanying these fluctuations have been periods of wide- 
spread unemployment, prevailing in all trades at the same 
time. The evil effects of temporary seasonal depressions 
have been inconsiderable as compared with the results of 
three- or four-year periods of idleness or part-time employ- 
ment. The causes of these periodic fluctuations are obscure 
and intangible, yet deeply founded in the modern industrial 
system. That they are obscure is best proved by the wide 
diversity of theories that trained economists have advanced 
to account for them. Discrepant opinions still persist. 
Merely the briefest resume of a few of the most important 
current theories of business cycles can be here included. 2 

John A. Hobson gives these periodic depressions the cen- 
tral position in his analysis of the unemployment question. 
He deprecates the tendency to " fritter away the unity of 
a great subject " by a study of detailed facts, which leads 
to a failure to discern the true single cause of the various 
phenomena. Unemployment, he maintains, is but an aspect 

^Seasonal Trades, by Webb and Freeman, which has been quoted 
above, contains comprehensive descriptions of various trades in which 
there are marked seasonal fluctuations. The introduction by Miss 
Poyntz is of especial value. 

Detailed data on seasonal irregularities in a number of trades are 
given in Charles Booth's Life and Labour of the People in London, 
vols, i, ii, iii, iv, second series (vols, v, vi, vii, viii of collected works), 
passim. 

* Cf. W. C. Mitchell, Business Cycles (in University of California 
Memoirs, vol. 3, Berkeley, 1913), pp. 5-20, for a more comprehensive 
summary of current theories. 

In order to round out the discussion of causes of cyclical fluctuations 
certain American theories will be advanced at this point, though this 
section is otherwise devoted to English theories. 



63] CONTEMPORARY ENGLISH THEORIES 63 

of trade depression, and " under-consumption is the direct 
economic cause of the industrial malady." * His argu- 
ment, in outline, is this: There is a right proportion be- 
tween saving and spending in the income of an industrial 
community at any time, the right proportion being that at 
which the amount saved will adequately provide for the 
demand for final commodities on the part of the population 
in the calculable future, maintaining full employment for 
the factors of production. However, " the existence of a 
surplus income not earned by its recipients . . . has the 
effect of disturbing the economical adjustment between 
spending and saving," for the surplus received in active 
times by the small well-to-do class must perforce be 
saved, their gross income being greater than their spending 
power. This " over-saving " leads to large investment in 
the means of production, and the markets become con- 
gested with goods which cannot be sold at a profit, con- 
sumption having failed to keep pace with the power of 
production. Then comes a fall in prices, the incomes of 
the wealthy are reduced until excessive saving is stopped, 
and the glut is slowly worked off. During the period of 
depression there is a " simultaneous excess of all the factors 
of production; " this condition is the true problem of un- 
employment. " Over-saving is the proximate cause of that 
condition; the existence of surplus incomes is the ultimate 
cause." 2 

The cause of market glutting (beyond the possibility of 
sale at a profit) is laid by W. H. Beveridge at another door. 
He agrees that with the present amount and distribution of 
the national income " agencies for future production are 

1 Problem of the Unemployed (London, 1896), p. viii. 

2 Cf. also J. A. Hobson, The Industrial System (London, 1909), pp. 
282-7. The most recent statement of Hobson's theory is given in this 
work. 



64 CONTEMPORARY THEORIES OF UNEMPLO YMENT [64 

set up in excess of present requirements." The reason, 
however, is found in the nature of competition. The at- 
tempt of a group of competing producers to " engross as 
large a share as possible of the market" leads sooner or later 
" to their joint production overshooting the demand and 
glutting the market." x Result the usual depression and 
unemployment until the accumulated stocks are cleared. 

The majority of the Poor Law Commission, while rec- 
ognizing trade cycles as an important factor in the unem- 
ployment problem, make no attempt to give a specific solu- 
tion for this evil, merely pointing out that with the modern 
system of industrial organization, each individual catering 
to the wants of others whom he may never meet, the marvel 
is that supply and demand balance each other so well as 
they do, not that there are occasional maladjustments. 2 

Professor Pigou s reasoning on the subject of these fluc- 
tuations and their relation to unemployment is novel. The 
amount of the " aggregate wage-fund " (i. e., the quantity 
of resources that a community is prepared at any time to 
devote to the purchase, at a given wage, of labor) 3 is de- 
pendent upon the amount of the real income of the com- 
munity and the degree of optimism which business men 
entertain as to the prospects of investment. Variations in 
both these factors (income and optimism) come about as 
the result of variations in the bounty of nature. In the 
conclusion that, in a considerable number of cases, booms 
in business confidence have their origin in good harvests, 
Pigou holds that " deduction and induction corroborate 
one another." 4 He further contends that there is a large 
element of truth in Jevons' connection of cyclical move- 

1 W. H. Beveridge, Unemployment, p. 59. 

2 Report of Royal Com. on Poor Laws, pp. 423-4. 

3 Pigou, Unemployment, pp. 113-4. 
'Ibid., p. 115. 



65] CONTEMPORARY ENGLISH THEORIES 65 

ments with solar changes. An additional point which is 
of importance in regard to the relation of these periodic 
depressions to unemployment is made by Pigou. " Cy- 
clical movements of the general wage-fund tend to react 
with exceptional force upon the demand for labor in indus- 
tries engaged in the production of instrumental goods." 1 
This is true for two reasons : In the first place investments 
are the essential point of fluctuation, and it is in the pro- 
duction of these instrumental goods that investment be- 
comes materialized. Secondly, variations in the demand 
for the production of new instrumental goods are larger 
partly because of the existence of a large stock of them, 
relative to the annual output, and partly from the fact that 
a period of boom adds to the stock and so confronts the 
ensuing period of depression with an enlarged initial 
supply. 2 His conclusion is that "A nation which concen- 
trates upon the manufacture of the instruments of industry 
courts, thereby, a relatively heavy burden of unemploy- 
ment." 3 

Of other explanations there have been many. Thus, 
" May ascribes crises to the disproportion between the in- 
crease in wages and in productivity, Aftalion to the dimin- 
ishing marginal utility of an increasing supply of com- 
modities, Bouniatian to over-capitalization, Spiethoff to 
over-production of industrial equipment and under-produc- 
tion of complimentary goods, Hull to high costs of con- 
struction, Lescure to declining prospects of profits, Veblen 
to a discrepancy between anticipated profits and current 
capitalization, Sombart to the unlike rhythm of production 
in the organic and inorganic realms, Carver to the dis- 
similar price fluctuations of producers' and consumers' 

1 Pigou, Unemployment, p. 112. 

8 Ibid., pp. 1 10-2. 3 Ibid., p. 112. 



66 CONTEMPORARY THEORIES OF UNEMPLOYMENT [66 

goods, Fisher to the slowness with which interest rates are 
adjusted to changes in the price level." 1 Because of the 
extreme importance of this subject to the problem under 
consideration it seems advisable, even at the risk of cover- 
ing ground that has been well trod, to summarize the ex- 
planation of business cycles given by Professor W. C. 
Mitchell. His explanation necessarily lacks the simplicity of 
the foregoing theories, for he holds that such fluctuations 
can only be understood when viewed as the result of the 
interaction of many and complex factors. The cycle may 
be traced through, starting at any one point : 

Recovering from a period of depression we start with these 
conditions — a low price level, a low cost of doing business, 
narrow margins of profit, liberal bank reserves, a conservative 
business policy, moderate stocks of goods, and cautious buying. 
Given these conditions, with accumulated stocks exhausted, 
population growing, timidity slowly being forgotten, and the 
investment demand returning, an expansion in the physical 
volume of trade begins. This spreads cumulatively through- 
out the industrial world, returning to give new impetus where 
it started. A rise of prices, also spreading rapidly, results, 
larger profits being coined by producers because the rise in 
supplementary costs lags behind the rise in selling prices. 
Large profits and business optimism lead to an expansion of 
investments, and the physical volume of business is further 
swelled. 

Stresses within the system of business begin to accumulate. 
The costs of doing business gradually increase; capital be- 
comes scarcer and interest rates rise; the negotiation of se- 
curities becomes more difficult. Selling prices can be raised 
sufficiently to offset these stresses in most industries. But 
for an important minority prices cannot be raised or capital 
cannot be secured and the prospect of declining profits must 

1 Mitchell, Business Cycles, p. 19. 



6y] CONTEMPORARY ENGLISH THEORIES 6y 

be faced. Credit, being based upon the capitalized value of 
present and prospective profits, begins to waver; investors 
become wary and press for a settlement of outstanding ac- 
counts. 

With the liquidation of the huge credits that have been piled 
up, a crisis develops. Liquidating debtors put pressure upon 
their own debtors; other creditors take alarm. This liquida- 
tion and the resulting contraction may be accomplished with- 
out a violent wrench, or may be characterized by a financial 
panic if the banking organization be weak. In the latter case 
the evils of the crisis are intensified. 

There follows a period during which depression spreads 
over the whole field of business and grows more severe. 
Wage-earners are discharged, family incomes fall, consumers' 
demand declines. Business demand and investment are 
curtailed. Prices fall, discouragement spreads, enterprise is 
checked. For two or three years industrial depression reigns 
and i. severe condition of unemployment exists. 1 

4. PROPOSED REMEDIES FOR UNEMPLOYMENT RESULTING 
FROM INDUSTRIAL FLUCTUATIONS 

Of the remedies proposed for unemployment due to 
seasonal fluctuations, the discussion of two, those concerned 
with unemployment insurance and with relief for men dur- 
ing periods of unemployment, will be deferred until the 
general subject of causes of unemployment is concluded. 
Certain others which apply to both seasonal and cyclical 
fluctuations will be considered under the latter head. 2 

The outstanding proposal as to methods of dealing with 
seasonal fluctuations exclusively is that looking toward the 
organized dovetailing of the various seasonal occupations, 
so as to give the workers in seasonal trades subsidiary occu- 

1 W. C. Mitchell, Business Cycles, pp. 571-9. Most of the foregoing 
summary is given in Professor Mitchell's. own words. 
2 Cf. infra, pp. 11 3- 11 7. 



68 CONTEMPORARY THEORIES OF UNEMPLOYMENT [68 

pations for the off-seasons. On the basis of studies made 
by the Royal Commission on the Poor Laws and by some 
of his own students, Sidney Webb puts forward the " eco- 
nomic hypothesis " that " there is no seasonal slackness in 
the community as a whole," x that the volume of employ- 
ment in the aggregate is practically constant throughout the 
year. Since weekly or monthly we are all consuming the 
same amount in the aggregate, it follows that " we are 
setting to work, in the aggregate, the same amount of 
labour." 2 The annual distress, therefore, resulting from 
alternations of employment and slackness in separate trades, 
is due only to failures in adjustment, since the " seasons " 
in different trades completely neutralize each other. In- 
telligently organized mobility, secured by means of national 
labor exchanges, will thus be able to eliminate most of the 
distress of this character through the dovetailing of the 
different seasonal industries into each other. 3 

This contention that the aggregate demand for labor is 
constant throughout the year is specifically denied by Pigou, 
who asserts that " the cold weather of winter is predomi- 
nantly a cause of contraction in the demand for labor, the 
area over which it cuts down demand being wider than 
that over which it augments demand." 4 Even though the 
winter depressions are only partly offset, however, by activ- 
ity in other trades, Pigou urges the efficacy of labor ex- 

1 Seasonal Trades, p. viii. 

2 Ibid., p. ix. 

3 J. A. Hobson in his latest book makes the same statement — that 
"the aggregate employment during any given year does not vary much" 
{Work and Wealth, N. Y., 1914, p. 230). Alternative trades for work- 
ers in irregular employment are suggested as being entirely feasible. 
That trades which are necessarily irregular should themselves carry the 
burden of the "labor reserve" needed is a further contention of 
Hobson. 

4 Pigou, Unemployment, p. 109. 



6g] CONTEMPORARY ENGLISH THEORIES 69 

changes in increasing the mobility of labor. The dove- 
tailing of seasonal occupations so as to provide employment 
throughout the year is also advocated by the majority of 
the Poor Law Commission. 1 

While recognizing that this process of " deseasonaliza- 
tion " would involve the displacement of a large part of 
the men now engaged in seasonal occupations, Beveridge 
favors it, though uncertain as to the extent to which sea- 
sonal correlation can be carried. 2 The root, however, of 
the seasonal fluctuation problem, as Beveridge sees it, is 
under-employment, the living from hand to mouth even 
during the busy months. The worker regularly employed 
most of the year can provide in advance, either through 
direct saving or through trade-union benefits, for the slack 
season, but the under-employed casual has no opportunity 
to do this. On him falls the chief burden of seasonality. 
It is as a question of wages, therefore, that seasonal un- 
employment must be considered. The problem of casual 
employment lies at the heart of that of seasonal employ- 
ment. With the remedying of the demoralizing conditions 
of casual employment will come an increase in the intelli- 
gence and foresight of the workers, which will result in 
their making adequate provision for foreseen periods of 
seasonal unemployment. 3 

A comprehensive discussion of the possible methods of 
obviating seasonality, or at least its most evil conse- 
quences is contained in the paper by Miss Poyntz in 
Seasonal Trades. 41 The tendency of widening markets, 
large-scale production, the introduction of machinery, 
with the resulting increase in over-head expenses, to 

1 Royal Commission on the Poor Law, vol. i, p. 517. 

2 Beveridge, Unemployment, p. 210. 

3 Cf. infra, pp. 90, 91, for Beveridge's decasualization proposals. 
* Pp. 55-09. 



jO CONTEMPORARY THEORIES OF UNEMPLOYMENT [70 

diminish seasonality has been mentioned. 1 The fact that 
adaptability on the part of the laboring force, as well as 
mobility, is needed for the success of dove-tailing opera- 
tions is emphasized; industrial training for the furtherance 
of such adaptability is urged. 2 

Some of the most important of the proposals for en- 
abling workers to meet seasonal depressions without the ill 
effects that characterize such phenomena at present are 
concerned as well with cyclical fluctuations. The various 
recommendations having to do with the unemployment that 
is a feature of one period of the business cycle are of two 
types, preventive and palliative. The preventive measures 
are those designed to do away with the cycle itself; the 
palliative measures are those proposed to relieve the accom- 
panying distress. The former type will be briefly dealt with 
first. 

Periodical depressions of industry have been and by many 
still are looked upon as inevitable — as the " shadow side of 
progress itself." This, on the whole, is the view of Bev- 
eridge, who holds that " they probably cannot be eliminated 
without an entire reconstruction of the industrial order." 3 
Many others of those writing on the subject of unemploy- 
ment accept cyclical fluctuations, if not as inevitable, at 
least as outside the scope of their subject, insofar as other 
than merely palliative measures are concerned. 4 There are 
those, however, who look upon these cyclical movements as 
preventable. 

Pigou puts forward several proposals for lessening the 
magnitude of these fluctuations. His program includes 

1 Cf. supra, pp. 60, 61. 

2 Material too detailed for inclusion here is contained in some of the 
other valuable papers in Seasonal Trades. 

3 Beveridge, Unemployment, p. 67. 

4 Cf. Report of Royal Commission on the Poor Laws, p. 427. 



7 i ] CONTEMPORARY ENGLISH THEORIES yi 

three measures : The bond of credit, which is the material 
basis for the close interdependence of the various elements 
in the industrial community, should be weakened, for this 
interdependence is the cause of the widespread character 
of the distress resulting from depressions. An increased 
amount of cash business and a reduction in the average 
lengths of credits are suggested as methods of accomplish- 
ing this end. Secondly, an enlightened banking policy 
conducing to the same end is urged. His third remedial pro- 
posal aims at reducing the stimulus to business booms by 
denying to business men the " excess of prosperity " which 
they reap because of the reduced real interest paid on loans 
during a period of rising prices. Fisher's plan of " stabil- 
izing the dollar " by making the standard coin virtually a 
token coin, while increasing or diminishing the mint price 
of bullion in accordance with variations in the index num- 
ber of general prices, is advocated by Pigou as a means of 
preventing the stimulus to expansion given by these excess 
profits. He asserts that the lessening in the average volume 
of unemployment which would result from this change 
would compensate for the extra expense involved. 1 

The remedy which J. A. Hobson proposes for unem- 
ployment is derived directly from his analysis of cyclical 
fluctuations. Surplus incomes — over-saving — under-con- 
sumption — this is the causal chain leading to unemploy- 
ment. Hence, the only effective remedy for unemployment 
must be one which will strike at these causes and " correct 
the normal tendency of production to outrun consump- 
tion." 2 The ownership of increased consuming power is 
the vital point upon which the remedy must turn, and it 
must aim at a system under which " the power to consume 
shall be accompanied by the desire to consume." s The 

1 Cf. Pigou, Unemployment, pp. 1 16-128. 

2 The Industrial System, p. 296. 3 Problem of the. Unemployed, p. 99. 



72 CONTEMPORARY THEORIES OF UNEMPLOYMENT [y 2 

measures which are to accomplish this are of four types. 
The taxation of unearned incomes, the money so secured 
to be dispensed in raising the standard of public life, thus 
increasing consumption and discouraging over-saving, is the 
major remedy proposed. Relief works for the unemployed 
are advisable solely because they involve increased consump- 
tion and lowered production. The raising of wages is a 
second method by which the surplus income can be reduced 
and consumption increased. The general shortening of 
hours will have a like effect. Finally, the removal from the 
labor market of superabundant laborers — juvenile workers, 
inefficients and weaklings — will tend to reduce the " over- 
supply of current productive power." 1 

None of the other English writers on unemployment 
have attempted to advance programs for preventing these 
cyclical fluctuations. Mitchell enumerates several modern 
agencies which are giving us, by degrees, slightly greater 
control over " the complicated machinery of the money 
economy." " Public regulation of the prospectuses of new 
companies, legislation . . . against fraudulent promotion, 
more rigid requirements on the part of stock exchanges 
regarding the securities admitted to official lists, more effi- 
cient agencies for giving investors information, and a more 
conservative policy on the part of the banks toward specu- 
lative booms," together with the tendency toward " inte- 
gration of industry," are some of the factors making for 
the reduction of the magnitude of these fluctuations, and 
hence of value as preventives of unemployment. 2 

There remain to be considered the palliative remedies, 

1 The Industrial System, p. 298. Certain references in Work and 
Wealth (1914) to "the necessary elasticity of economic life," "a cer- 
tain amount of unavoidable unemployment," etc., seem to show that 
Hobson does not look upon the complete elimination of unemployment 
as possible. Cf. pp. 229-30. 

2 Cf. Business Cycles, pp. 585-6. 



73] CONTEMPORARY ENGLISH THEORIES 73 

those designed to mitigate the evil effects of industrial de- 
pressions. 1 Chief of these is the proposal so to manipulate 
production as to lessen the fluctuations in the demand for 
labor that accompany business cycles. This manipulation 
may be voluntary on the part of private producers, may be 
governmentally induced by means of bounties or taxes, or 
may be accomplished by means of the distribution of public 
(state or municipal) consumption. There are thus two 
types, manipulation from the side of production and 
manipulation from the side of consumption. 2 

The possibility of varying the volume of production de- 
pends upon the character of the good produced. If it be a 
perishable good, variation of production so as to offset 
fluctuations is, of course, impossible. For if the amount 
of labor engaged in the production of this good in certain 
districts be increased during periods of depression, the in- 
creased production will cause a lowering of prices, and 
production must fall off in some other districts. 3 A de- 
crease of production in good times will have a correspond- 
ing effect, so the desired balancing of fluctuations cannot 
be achieved in this way. The situation is different, how- 
ever, where the good produced is a durable one, and storing 
is possible. In the production of staple, standardized arti- 
cles, which are not costly to store nor subject to changes 
of fashion, the demoralizing effects of a fluctuating labor 
demand can be largely prevented through manufacture for 
stock. Pigou contends that the number of commodities 
which can be made for stock, either through increased 
standardization or increased storage facilities (e. g., by re- 
frigeration) is constantly increasing, with important result- 

1 As was mentioned above, certain of the remedies to be here enu- 
merated apply to seasonal as well as cyclical fluctuations. 

2 Cf. Pigou, p. 175. 3 Ibid., p. 176. 



74 CONTEMPORARY THEORIES OF UNEMPLOYMENT [74 

ing possibilities for the diminution of unemployment. 1 It 
was noted above 2 that making for stock is already widely 
practised by those firms whose overhead expenses, because 
of expensive machinery, etc., are large, or which employ 
skilled labor which cannot be easily secured. 3 This meas- 
ure, obviously, can be applied either to seasonal or to cycli- 
cal depressions. 
j There is one further suggested method of manipulating 
production — governmental creation of new industries to 
act " as reservoirs of labor, as sources of an elastic demand 
able to expand and contract simultaneously as the demand 
in the rest of the labor market contracts and expands." 4 
Attention should be called in advance to the fact that it is 
not the mere creation of new industries as such that is 
urged by those who suggest this method of relieving unem- 
ployment. Though proposals for the solution of the prob- 
lem of unemployment through the opening of new sources 
of demand have been made at various times in the past, 
such views are virtually discarded today. Fluctuations and 
disorganization cannot be prevented by an increase in the 
number of ordinary industries " whose activity at any 
given moment is determined by the current demand for the 
goods produced." 5 

The most definite proposal for the taking up, by the 
creation of governmental work, of the slack labor resulting 
from seasonal and cyclical fluctuations is made by Rown- 
tree and Lasker. 6 Their contention is that " any industry 

1 Pigou, Unemployment, pp. 100-3. 

2 P. 61. 

3 Cf. Seasonal Trades, pp. 57-9. 

4 Beveridge, p. 194. 

6 Rowntree and Lasker, Unemployment, p. 73. Cf. also Beveridge, 
pp. 193-4. 
6 Unemployment, pp. 73-9, 306-8. 



75] CONTEMPORARY ENGLISH THEORIES 75 

in which the number of persons engaged can be modified 
without regard to the immediate state of trade " can be 
used as a means of maintaining a fair degree of equilibrium 
between the supply of and the demand for labor. In for- 
estry, especially, they believe they have such an industry, 
and it is with it that their suggestion is chiefly concerned. 
From the Report of the Royal Commission on Afforesta- 
tion they quote the statement that there are in Great Britain 
eight and one-half million acres suitable for afforestation. 
They estimate that during the period of planting 500,000 
men could be employed at this work for four months each 
year, the number and length of time worked varying with 
the general state of trade. After the maturing of the trees 
(from 40 to 80 years after planting) 21,250 men would 
be employed permanently and 191,250 for four months 
each year. About nine-tenths of the employees would be 
temporary workers, a proportion similar to that prevailing 
in Belgium where a like scheme is at present in operation. 
The fundamental principles the authors lay down for all 
such work are that it should be needed, and that it should 
be conducted on business principles, not as relief work. 
Though such measures would only provide work for a cer- 
tain class of laborers it is contended that their temporary 
absorption would immediately improve the prospects of 
those who were left. 

The minority of the Royal Commission on the Poor 
Laws endorse a similar proposal for the carrying on of 
afforestation and land reclamation, though they advance 
the plan as one primarily for meeting cyclical depressions. 
The same warning against making these works relief works 
is sounded. The enterprises should be valuable in them- 
selves, men suited to the work should be employed, and 
normal wages should be paid. The number employed each 
year should be based upon reports from the national labor 



76 CONTEMPORARY THEORIES OF UNEMPLOYMENT [76 

exchange as to conditions in the labor market. As an addi- 
tional argument in favor of the scheme it is asserted that 
the work will actually be done cheaper, due to the fact that 
capital, which is unemployed just as labor is during periods 
of depression, can be secured at lower rates. 1 

Beveridge takes emphatic exception to this proposal for 
governmental creation of new industries. 2 He advances 
three arguments against it : Such works, he contends, would 
inevitably become relief works, where inefficient men were 
paid more than they were worth. 3 If an attempt were 
made to avoid this by hiring only men skilled in the work 
to be done, only a certain few trades would be benefitted, 
the general labor market being unaffected. Secondly, such 
industries could not act as reservoirs for the labor market 
unless employment in them were made less attractive than 
ordinary employment — that is, men would not flow out 
again when industrial conditions became better. (The very 
obvious expedient of discharge from state employment 
when general conditions bettered evidently did not occur to 
Beveridge.) His third objection is the most important and 
the one with the greatest validity. " To set up a reservoir 
of labor at the public cost," he says, " is simply to per- 
petuate industrial disorganization." 4 The methods con- 
ducing to casual employment and demoralizing periods of 
idleness would be supported by affording a refuge to men 
during the periods of idleness. " The economic causes of 
unemployment are left untouched " by such measures. It 

1 Minority Report, part ii, pp. 284-6. 

2 Beveridge, Unemployment, pp. 193-7. 

3 Valuable data concerning such works in the past are contained in 
the report by Cyril Jackson and J. C. Pringle on " The Effects of Em- 
ployment or Assistance given to the Unemployed since 1886 as a means 
of Relieving Distress outside the Poor Law," Report of Royal Com- 
mission on the Poor Laws, appendix, vol. xix. 

4 Beveridge, Unemployment, p. 196. 



77] CONTEMPORARY ENGLISH THEORIES yy 

is upon the disorganized condition of the labor market that 
Beveridge believes the first attack must be made. 1 

Manipulation from the side of consumption is practically 
confined to manipulation of the demands of public author- 
ities, national and municipal, though the similar distribu- 
tion of railroad orders has been suggested. It may take 
the form of manipulation designed to regularize the public 
demand for a commodity or a service, manipulation de- 
signed deliberately to " casualize " public work which 
would normally be regular, so as to offset fluctuations in 
private work, or manipulation of normally irregular de- 
mands so as to accomplish the same end. Authorities are 
divided as to the advisability of each of these various types 
of governmental distribution of demands. 

The radical policy of "deliberately introducing into the 
demands of public authorities fluctuations complementary 
to those occurring in private industry " is strongly advo- 
cated by the minority of the Poor Law Commission. 2 
Proceeding from an estimate made by A. L. Bowley, they 
assert that if three or four per cent of the government 
orders were held back each year and concentrated on the 
slack years of industrial depression, unemployment due to 
cyclical fluctuations could be largely eliminated. In place 
of the policy of the past, in which no heed was paid by the 
government to the state of the labor market in letting its 
contracts, they urge the " earmarking " of about four mil- 
lion pounds a year of the money annually expended on 
works and services, to be set aside and spent during the 
lean years in private industry. The ultimate expenditure 
of the money — on government printing, buildings, battle- 

1 The reason for this stand by Mr. Beveridge will appear when his 
analysis of labor reserves is considered. Cf. infra, pp. 90, 91. 

7 Minority Report, part ii, pp. 280-4. Cf. also Prevention of Destitu- 
tion, pp. 112-24; Mitchell, Business Cycles, pp. 586-7. 



yg CONTEMPORARY THEORIES OF UNEMPLOYMENT [78 

ships, telegraph and telephones, etc. — would be the same, 
but a consistently administered ten-year program would re- 
place the present haphazard distribution of the national 
income. Though the minority admit that only the workers 
in certain industries would be directly helped, they contend 
that there would be given an automatic impetus to contin- 
uity of employment in all trades through the prevention of 
discontinuity in certain of the central trades. Here would 
be secured the " approximate uniformity, one year with 
another, in the aggregate demand for labor in the com- 
munity as a whole," * without which unemployment on a 
large scale cannot be prevented. 

The majority of the Poor Law Commission take another 
view of the possibilities in this direction. The deliberate 
casualization of public work, the deliberate introduction of 
irregularities for the benefit of the intermittent laborer, is 
regarded as " pernicious." 2 Only insofar as public work is 
normally irregular is it advisable, according to the major- 
ity, to attempt to counterbalance fluctuations in private in- 
dustry by means of the distribution of public demands. 
They do agree, however, that that part of the public de- 
mand for labor which normally fluctuates should be made 
to " vary inversely with the demand in the open market." 

A very careful analysis of the various possible methods 
of manipulating governmental demands is made by Pigou. 3 
The first type of such manipulation mentioned above, that 
designed to regularize a public demand which is normally 
almost continuous in character, is unreservedly endorsed as 
a preventive of unemployment. The concentration of nor- 
mally irregular demands upon the slack years is also advo- 
cated. To the minority plan for complementing private 

1 Prevention of Destitution, p. 114. 

2 Cf. Report of Poor Law Commission, part vi, ch. 4, vol. i, pp. 524-5- 
8 Pigou, Unemployment, pp. 178-86. 



79] CONTEMPORARY ENGLISH THEORIES yg 

fluctuations by the distribution of the public demands he 
gives a qualified approval. If there be a high degree of 
mobility in the labor force of a country, the " introduction 
of compensatory fluctuations " is advisable. However, if 
labor be immobile, if its movement between the centers of 
public demand and those of private demand be impeded, 
the introduction of fluctuations in public work will merely 
result in establishing other casual occupations, each the 
center of a separate labor reserve. The better developed 
the system of national labor exchanges, therefore, the more 
successful would be such plans as that of the minority. 
Pigou's reasoning on this point appears conclusive. 

Another suggestion for preventing, or at least lessening, 
the extent of the unemployment due to industrial fluctua- 
tions is that for promoting the elasticity of wage rates. 
Pigou best develops this theory, and places the most em- 
phasis upon it as a means of counteracting the evil effects 
of business depressions. We have seen 1 that this econo- 
mist considers all unemployment to be due to faulty ad- 
justment between standard wage rates and rates normal to 
conditions of supply and demand in the labor market at 
any given time. If the demanded wage rate is in excess of 
that which would be established by all the laborers in a 
certain market competing among themselves for positions, 
with given demand conditions, unemployment will result, 
the amount of unemployment being dependent upon the 
amount of this excess. The possibility of maladjustment 
between standard rates and those rates at which every man 
would be employed is, of course, increased by fluctuations 
in the demand for labor. Hence, if rigid rates be main- 
tained in the face of a falling demand, it is inevitable that 
a number of workers will be thrown out of employment. 
Pigou's conclusion is that " unemployment is likely to be 

1 Cf. supra, p. 49. 



80 CONTEMPORARY THEORIES OF UNEMPLO YMENT [80 

greater, the more rigidly wage-rates are maintained in the 
face of variations in the demand for labour." 1 

The two circumstances impeding the necessary plasticity 
of wages are the variability in the purchasing power of 
standard money, and the absence of harmonious co-opera- 
tion between workers and employers. 2 Such lack of adjust- 
ment as is due to the failure of money wages to correspond 
to changing real wages might be in part at least obviated by 
the adoption of some such scheme as that of Fisher's for 
giving the dollar or pound a fixed purchasing power. 3 The 
rigidity in wage rates due to the fact that employers and 
employees do not understand each other's problems, and 
do not attempt to adjust the scale of wages to demand fluc- 
tuations, is to be eliminated through a perfection of the 
methods of industrial peace. The general principle of the 
sliding scale is endorsed by Pigou as a means of securing 
this adjustment. 4 

Beveridge looks upon elasticity of wages as of minor 
importance, as his analysis of unemployment does not at 
all correspond with that of Pigou. He endorses the gen- 
eral principle of lower wages in bad times as one method 
of putting a premium on getting work done at the times 
when employment is slack, though urging the necessity of 
not impairing the general level of wages through such tem- 
porary concessions. 3 

1 Unemployment, p. 77. * Ibid., pp. 79-88. s Ibid., pp. 125-28. 

* Pigou regards the prevention of industrial disputes as vital to the 
prevention of unemployment. Not only is industrial peace advisable 
as a means of securing elasticity of wages, but only through such peace 
can the unemployment due to the stoppage of general industry by 
strikes in particular fields be done away with. A full discussion of his 
proposals for securing machinery for collective bargaining and con- 
ciliation is not possible in this paper. Cf. Unemployment, pp. 81-93, 
128-146. 

6 Unemployment, pp. 231-2. 



Si] COXTEMPORARY ENGLISH THEORIES 8 1 

The plans above discussed have all aimed at lessening the 
amount of unemployment itself. There remain to be con- 
sidered two measures for the prevention of the distress 
caused by industrial fluctuations, namely, the averaging of 
work, and the development of a system of rural homes, 
with small farm plots, for city workers. 1 

The averaging of work, by means of the elasticity of 
working hours, is a method of meeting fluctuations that 
has long been applied, though in limited fields. Coal 
mining and cotton spinning in England are conspicuous for 
their utilization of this measure. The method involves the 
employment of the full number of workers in a given in- 
dustry, or factory, for fewer hours per week during periods 
of trade depression, instead of the retention of only a part 
of the force on full time. The work to be had is averaged 
over the whole force. Conversely, in times of abnormal 
industrial activity, the force necessary during normal times 
is worked longer hours, in preference to the employment 
of additional men. This latter policy prevents the drawing 
into an industry of a surplus labor reserve, the members 
of which can find employment only during the busy season. 2 
The working of shorter hours in dull seasons is almost 
universally endorsed, but the policy of overtime in busy 
periods, which is urged as an essential element in the same 
scheme, 3 is strongly opposed by some. This is particularly 
true of the trade unions. Systems of sharing work by 
" reducing the number of working hours per day per man " 
have been often resorted to by the unions. 4 Yet overtime 

1 Two further measures, unemployment insurance and the general 
assistance of unemployed men, are taken up below, pp. 107-117. 

2 For a discussion of labor reserves, cf. infra, pp. 84-97. 
z Cf. Beveridge, pp. 220-2, and Pigou, pp. 186-8. 

4 Cf. S. and B. Webb, Industrial Democracy (London, 1902), pp. 430- 
452, on " Continuity of Employment." Cf. also Report of Poor Law 
Commission, appendix, vol. ii, p. 124. 



82 CONTEMPORARY THEORIES OF UNEMPLO YMENT [82 

is an object of constant attack by the unions and their sup- 
porters. Miss Poyntz attributes seasonal irregularity in 
large part to this as a cause. 1 The minority of the Poor 
Law Commission take a similar stand, contending that legal 
limitation of overtime forces employers to regularize their 
work, and thus prevents excessive seasonal fluctuations. 2 
Some very sound criticisms of the short-time expedient are 
made by Rowntree and Lasker. Their statistics show that 
its applicability is limited, in the main, to the highly organ- 
ized trades. The chief dangers inherent in this method of 
meeting fluctuations are that it " places the whole burden 
of meeting the difficulty upon the workers, regardless of 
their individual ability to bear it," and " conceals the evil 
of unemployment while doing nothing to lessen it." 3 A 
deterioration in the workers' standard of living is feared 
by these investigators if there be a general adoption of such 
a policy, though as a temporary expedient, within a limited 
field, it is practicable. 

A second method of relieving the distress due to unem- 
ployment, while making no attempt to touch unemployment 
itself, is the planned "decentralization of town population " 
through the provision of plots of rural land as homes for 
town workers. Among the authorities dealing primarily 
with unemployment, Rowntree and Lasker are practically 
alone in their emphasis upon this measure, and in their 
careful exposition of the plan. 4 

When all the preventive measures have been worked out 
and applied, it is contended that fluctuations will persist, 
that manual laborers will have to face periods of unem- 

1 Seasonal Trades, p. 63. 

2 Minority Report of Royal Commission on the Poor Laws (Parlia- 
mentary edition), p. 1185, footnote. (Quoted, Pigou, p. 187.) 
3 Rowntree and Lasker, Unemployment, pp. 79-80. 
* Ibid., pp. 262-89. 



83] CONTEMPORARY ENGLISH THEORIES 83 

ployment. Basing their opinion upon a careful study of 
conditions in Belgium, these authorities propose, as a 
method of preventing the deterioration and demoralization 
that accompany the periods of idleness of urban workers, 
a scheme enabling workers to reside in the country while 
working in the cities. There are three essential economic 
conditions involved in the working out of such a plan — the 
securing of land in small plots and in the desired localities, 
cheap and rapid transit between town and country, and the 
opportunity of securing capital upon easy terms for the 
erection of houses. That these conditions can be fulfilled 
in England as well as in Belgium is the fervent opinion of 
the two authors. The trouble involved is, to their minds, 
more than balanced by the unquestionable gains in the 
health and character of the working classes which could be 
secured under such a system. 1 

A similar proposal, essentially for the purposes of coun- 
teracting the rural exodus, solving the agricultural labor 
problem and re-creating the old yeomanry, is elaborated by 
Miss Dunlop 2 in concluding a comprehensive analysis of 
the whole rural problem. Tenancy rather than ownership 
is requisite for the building up of a small farm system, 
Miss Dunlop claims, citing the failure of the Allotments 
Act of 1892 to prove the point. Greater success is looked 
for from the Small Holdings and Allotments Act of 1907, 
under the provisions of which 60,889 acres were acquired 
within two years. It is interesting to hear that the Small 
Holdings Commission, who are administering the Act, con- 

1 Their chapter on " A Valuable Suggestion from Belgium " embodies 
a big idea. It is interesting as the only one of their suggestions 
which goes back to that which they consider to be the fundamental 
cause of unemployment — synchronous idleness, or but partial utiliza- 
tion of the three factors in the creation of all wealth — land, labor and 
capital. Cf. p. 68. 

2 The Farm Laborer, pp. 221-52. 



84 CONTEMPORARY THEORIES OF UNEMPLO YMENT [84 

tend that the best method of establishing small holdings is 
through letting an area of land to a co-operative association 
for cultivation. 1 

5. THE LABOR RESERVE 

From the question of industrial fluctuations we pass to 
the third of the main causes of unemployment — the main- 
tenance of labor reserves. The fact of the existence of 
chronic over-supplies of casual labor in various occupations, 
with resulting under-employment and destitution, has long 
been recognized. Booth and his co-workers, in their survey 
of the working people of London in the late 8o's and early 
90's, described it. 2 Sidney Webb, writing at about the 
same time, testified to " the fearful daily struggle for bread 
at the Dock gates." 3 But the discovery of the reason for 
this " chronic and ubiquitous over-supply of casual labor/' 
which the Webbs term " perhaps the most momentous of 
this generation in the realm of economic science," * was 
only recently made. It is Beveridge who has made the 

1 The Farm Laborer, p. 239. Kropotkin's Fields, Factories and 
Workshops (London, 1913), contains valuable data on the question of 
the small farm system. Cf. especially chs. iii, iv and v (pp. 79-240). 

2 Charles Booth, Life and Labour of the People in London, first 
series, " Poverty," 1892-3. Vol. i, pp. 37-50, a vivid description of the 
living and working conditions of the four lowest classes; pp. 146-155, 
on the causes of poverty; see especially p. 152 for a partial anticipation 
of Beveridge on labor reserves. Vol. iv, pp. 12-36, "The Docks," by 
Beatrice Potter (Mrs. Sidney Webb). See also vol. iii of second 
series (vol. vii of complete set), pp. 392-432, for a later description of 
dock labor. Second Series, " Industry," 1895-1903. Vol. i (vol. v of 
complete set), pp. 87-135, on conditions of employment in the building 
trades. Detailed descriptions of the different trades are given in vols, 
i, ii, iii, iv of the series (vol. v, vi, vii, viii of complete set). Vol. v 
(vol. ix of complete set) contains valuable material on the irregularity 
of earnings, pp. 228-262. 

3 Sidney Webb, The London Programme (London, 1891), p. 7. 

4 Prevention of Destitution, p. 130. 



85] CONTEMPORARY ENGLISH THEORIES 85 

most original and most intensive studies in this field. Of 
the contemporary writers, none have materially added to 
Mr. Beveridge's analysis of the problem. 1 

There are these observed facts to be explained : The dis- 
tress from want of employment is chronic. An " irreduc- 
ible minimum " of unemployment exists in all trades at all 
times. Trade-union statistics prove that this unemploy- 
ment is due to loss of time by many, not to the chronic idle- 
ness of a few. The typical applicant to distress committees, 
moreover, is not unemployable, but industrial, a casual 
laborer. That this unemployment is due to an excessively 
rapid increase of population is disproved by known facts — 
unemployment in rapidly growing industries, increasing 
productivity of labor, and the rising remuneration of labor, 
which proves it to be of increasing importance in pro- 
duction. 

The explanation of the existence of this irreducible min- 
imum of unemployment is found in the labor reserve which 
tends to accumulate in modern industries. This reserve of 
labor is made up of " the men who within any given period 
are liable to be called on sometimes but are not required 
continuously." 2 Its size depends upon the number of sep- 
arate employers, the irregularities of their separate busi- 
nesses and of the industry as a whole, the relative mobility 
of labor, the average length of engagements, and the extent 
to which chance prevails in the hiring of workers. Condi- 
tions in any one of these respects may be such as to result 
in the development of a " stagnant pool " of labor in an 
industry; the size of the reserve may be increased by the 
cumulative action of any or all of the other factors. Bev- 
eridge's analysis of their separate and mutual effects upon 
the labor market may be briefly summarized : 

1 Unemployment, "The Reserve of Labor," ch. v, pp. 68-110. 

2 Ibid., p. 102. 



86 CONTEMPORARY THEORIES OF UNEMPLO YMENT [S6 

The number of workers who gather in any given center 
of the labor market will tend to equal the maximum num- 
ber who may be able to obtain employment in that center. 
If each employer in a certain industry maintains his own 
center of employment, so that no man working for him 
works for any other employer in that industry, a separate 
reserve will be built up for each of them. If the volume 
of the business of each varies from day to day, week to 
week, or month to month, the number of workers employed 
and " at the gate " will tend to equal the maximum number 
employed during the busiest period. If the term of en- 
gagement is brief, and if the element of chance enters in the 
selection of workers, the matter is further complicated and 
the reserve is further swelled. With no discrimination 
whatsoever, , every man will in the long run get as much 
employment as every other man. The number of competi- 
tors for positions in each given center of employment will, 
therefore, tend to increase until the average remunera- 
tion received by each reaches the subsistence level of the 
class of men employed. If the average pay be below this, 
certain men will have to withdraw; if it be above the sub- 
sistence level, newcomers, having equal chances for em- 
ployment, will attach themselves to the industry. 1 

Assume now that instead of each employer drawing his 
labor supply from his own reserve there is perfect mobility 
of labor within the given industry ; the reserve will tend to 
equal the maximum number employed in the industry as a 
whole at the busiest season. The separate fluctuations of 
individual employers will here partially neutralize each 

1 It should be noted that the greater the degree of skill required, and 
the stronger the barriers to admittance to the given occupation, the less 
applicable is this reasoning. The casual occupations are largely residual 
in character, however; being unskilled, they are subject to "constant 
and unlimited pressure of competition downwards from every other 
grade of industry." 



87] CONTEMPORARY ENGLISH THEORIES 87 

other, and so cut down the necessary reserve. The author 
illustrates this point by assuming ten centers of casual em- 
ployment, each employing a minimum of 50 men and a 
maximum of 100 men. A total force of 1000 men will thus 
be maintained. In the industry as a whole, however, the 
minimum number employed is 700, the maximum 800. 
With perfect fluidity of labor a reserve of 100 men will 
suffice, and the extra 200 men who have been living in an 
under-employed condition forced out. 1 Thus, the greater 
the degree of mobility of labor, the smaller will be the 
necessary reserve maintained in an industry. An excessive 
element of chance, complete absence of selection in em- 
ployment, would, of course, vitiate the favorable results of 
mobility in the cutting down of the reserve. 

On the basis of this reasoning Beveridge distinguishes 
three elements in the total reserve of labor for any occupa- 
tion : those men representing fluctuations in the total volume 
of work in the industry as a whole; those representing the 
element of friction in the labor market ; and those " at- 
tracted and retained by the perpetual chance of work." 2 

This tendency toward the accumulation of reserves exists 
in varying degrees of strength in practically all industries, 
though seen in its most vicious forms in the casual occupa- 
tions. The reserve as such is a " normal industrial phe- 
nomenon," necessary in all the industries liable to fluctua- 
tions in volume. This needed power in a given industry 
may be maintained, without producing distress, either 
through a high wage level, unemployment insurance, or 
elasticity of hours. Usually, however, faulty methods of 

1 Beveridge, pp. 77-8. 

2 Ibid., p. 81. Beveridge illustrates and emphasizes his arguments on 
these points by reference to the conditions at the London Docks, where 
all the factors giving rise to labor reserves may be seen in active opera- 
tion. 



88 CONTEMPORARY THEORIES OF UNEMPLO YMENT [88 

securing the reserve power are resorted to ; the men of the 
reserve suffer a continuous " leakage of employment," and 
there results the demoralizing evil of under-employment — 
the reduction of earnings to, or even below, the level of 
bare subsistence. Though all the members of a labor re- 
serve are subject to irregularity of employment, it is only 
that element which is called on " often enough to be pre- 
vented from drifting away elsewhere, but not often enough 
to obtain a decent living " * which constitute the " under- 
employed." It is in the casual occupation, to which en- 
trance is free and in which every one has a chance of secur- 
ing work, that the incessant competition of low subsistence 
standards works out in demoralizing under-employment. 

The deteriorating effect of unemployment will be touched 
upon in considering the personal factor. 2 The same vicious 
reaction upon personal character, the perpetuation and in- 
tensification of the conditions conducing to reduce indi- 
viduals to casual work, is characteristic of under-employ- 
ment. Wages are inefficiently spent; wives and children 
are forced into industry; the securing of public relief 
prompts a descent into the unemployable class. Finally, 
there is the fact that in a world where chance rules supreme, 
where " the good are not more successful in securing work 
than the evil," personal merit and honesty are almost draw- 
backs. " No class in the community," says the minority of 
the Poor Law Commission, " could withstand the demoral- 
izing influence of such a view of life and such a system." 3 

Beveridge's analysis of the labor reserves is, as has been 
noted, the most comprehensive. Pigou's approach to the 
problem is somewhat different, his method involving far 
more of abstract reasoning than does that of the practical 

1 Beveridge, p. 106. - Cf. infra, pp. 100, 102. 

* Minority Report, pt. ii, p. 218. 



89] CONTEMPORARY ENGLISH THEORIES 89 

unemployment relief administrator, Mr. Beveridge. Pro- 
fessor Pigou points out a double cause for the origin of 
reserves. He considers that unemployment is due to lack 
of adjustment between demanded or established wage rates 
and the normal competitive rates at which all workers in a 
given market could secure employment. 1 If, now, in any 
given occupation the actual wage has been raised artificially 
above the level ruling for similar work elsewhere, new men 
will be drawn into the occupation until the expectation of 
earnings (" the wage rate multiplied by the chance of em- 
ployment ") is reduced to the level of earnings that prevail 
outside. 2 If the artificial increase be ten per cent, ten per 
cent of the men assembled there will, on the average, be 
unemployed. This holds true, however, only where the 
method of engagement is of the casual type. Where effec- 
tive barriers are maintained, even though the attractive force 
of high wages is felt, an inflow of workers will be pre- 
vented. 

Closely allied with this cause of labor reserves is another 
factor, that of industrial fluctuations. The rates in occu- 
pations giving irregular employment must be higher than 
those affording regular employment for two reasons — to 
compensate for greater uncertainty of employment, and to 
build up reserves w T hich can be used in busy times. Thus 
the wage rate in fluctuating occupations will be such as to 
attach to such occupations " a number of work-people 
roughly intermediate between the number for whom em- 
ployment at that rate can be found in good times and in 
bad times, respectively." 3 Wage rates above normal are 
thus the prime cause of the creation of reserves of labor, 
according to Pigou's reasoning. 

1 Cf. supra, p. 49. 

2 Pigou, Unemployment, pp. 54-7. 3 Ibid., p. 97. 



go CONTEMPORARY THEORIES OF UNEMPLO YMENT [g Q 

The minority of the Poor Law Commission accept Bev- 
eridge's analysis of labor reserves unqualifiedly. Both 
majority and minority reports condemn in strong words 
the system which creates these " stagnant pools " of labor, 
and subjects industrial workers to the enervating influence 
of chronic under-employment. Three sets of special in- 
vestigators were sent out by the Royal Commission to work 
on unemployment and allied problems. "All these inquirers 
. . , starting on different lines of investigation and pursuing 
their researches independently all over the kingdom . . . 
came, without concert, to the same conclusion, namely, that 
of all the causes or conditions predisposing to pauperism, 
the most potent, the most certain, and the most extensive 
in its operation was this method of employment in odd 
jobs." "All these (other) conditions (low wages, insani- 
tary conditions, excessive hours of labor, outdoor relief, 
drunkenness) injurious though they are in other respects, 
were not found, if combined with reasonable regularity of 
employment, to lead in any marked degree to the creation 
of pauperism. , ' * 

6. PROPOSED REMEDIES FOR UNDER-EMPLOYMENT 

The system of labor reserves has a bearing upon the 
problem of unemployment only in that it is the chief factor 
in the creation of under-employment. It is not the reserves 
of labor which are to be done away with, therefore, but the 
resulting evils. The problem, Beveridge says, is essentially 
one of business organization — " that of providing a reserve 

1 Minority Report, pt. ii, pp. 195-6. A study of the many questions 
concerning casual labor, under-employment, etc., which are connected 
with the subject of labor reserves cannot be entered upon here. In 
addition to the references quoted, valuable material on the subject, 
statistical and otherwise, can be found in the Report of the Special 
Committee on Unskilled Labor, Charity Organization Society (London, 
1908) ; cf. also Report of the Royal Commission on the Poor Laws, pt. 
vi, ch. i (vol. i, pp. 427-31) ; Prevention of Destitution, pp. 129-33. 



gi] CONTEMPORARY ENGLISH THEORIES 91 

of labor power to meet fluctuations in such a way as not to 
involve distress.'' * It is an industrial method which is to 
be reformed. 

The remedying of the baneful results of the present 
labor-reserve system involves three distinct steps. First 
must come the organization of the labor market, the secur- 
ing of organized fluidity of labor by means of a national 
system of labor exchanges. Secondly, a policy of " de- 
casualization " must be carried through, a strict system of 
concentrating all irregular work upon the smallest possible 
number of men necessary. Lastly, provision must be made 
for the absorption of the surplus of casual labor who are 
excluded from the chance of work by the enforcement of 
the policy of concentration involved in decasualization. 

The advisability of a national system of labor exchanges 2 
has been touched upon in considering other causes of un- 
employment. By means of these exchanges men thrown 
out of employment by changes of industrial structure 3 
may be guided to new occupations. Men turned out be- 
cause of advancing age 4 can be fitted into old men's places, 
which can be ferreted out by such agencies. Juvenile 
workers 5 can be advised as to industrial opportunities, and 
the flowing stream of entrants into industry can be guided 
into channels where permanent work awaits them. The 
dovetailing of seasonal industries and the provision of 
subsidiary occupations 6 can be best attempted through such 
a system. 

But it is with the men of markedly discontinuous em- 
ployment, the men who are chronically under-employed, 

1 Beveridge, Unemployment, p. no. 

2 Cf. supra, p. 37, for a summary of the provisions of the Labor 
Exchanges Act. 

3 Supra, p. 53. 4 Supra, p. 54. 

5 Supra, p. 37. 6 Supra, pp. 67, 68. 



92 CONTEMPORAR Y THEORIES OF UNEMPLO YMENT [g 2 

that a labor-exchange system " reaches its highest utility." 
Frederick Harrison has forcefully described the condition 
of the men of this class. " In most cases the seller of a 
commodity can sell it or carry it about from place to place 
and market to market with perfect ease. He need not be 
on the spot; he can generally send a sample; he usually 
treats by correspondence. ... It is totally otherwise with 
a day laborer. . . . He must himself be present at every 
market,, which means costly personal locomotion. He can- 
not correspond with his employer ; he cannot send a sample 
of his strength; nor do employers knock at his cottage 
door." a It is with this class that the system of personal 
application, of labor-hawking, of aimless and undirected 
wandering in search of work universally persists. Mobility 
in the labor market, which has been "demanded by econo- 
mists since Adam Smith," is secured with the maximum of 
friction and the maximum of distress among the working 
classes. The consensus of opinion is so strongly in favor 
of a national co-operating system of free labor exchanges 
that little space need be given here to the various arguments 
in favor of it. The majority of the Poor Law Commission 
look upon a comprehensive system for assisting the mobil- 
ity of labor, " based upon industrial supply and demand " 
as imperatively necessary. 2 The minority express even 
more emphatically the need of such a system. 3 Professor 
Pigou states that organized and intelligent fluidity of labor 
would make unnecessary the maintenance in irregular occu- 
pations of wage rates so far above the normal as to retain 
a reserve of labor for use during busy seasons. 4 

1 Quoted, F. A. Walker, The Wages Question (N. Y., 1886), pp. 183-4. 

2 Report of Poor Law Commission, pt. vi, ch. 4 (vol. i, pp. 505-17). 

3 Minority Report, pt. ii, pp. 248-67. Cf. also Prevention of Destitu- 
tion, ch. vi, passim. 

4 Pigou, Unemployment, pp. 146-70. A. L. Bowley, in an article on 



9 3] CONTEMPORARY ENGLISH THEORIES 93 

An adequate national system of labor exchanges having 
once been established, the enforcement of a policy of strict 
decasualization is the next step necessary for the elimina- 
tion of under-employment. 

The irregularity of demand which lies at the root of 
under-employment cannot be prevented. But, through the 
agency of the labor exchanges, the separate reserves of 
labor maintained by the individual employers for the pur- 
pose of meeting these fluctuations can be replaced by one 
common reservoir. " The Stagnant Pools of labor can be 
drained," 1 if each group of similar employers secure all 
their irregular men from this common center. The Webbs 
propose that the hiring of men for irregular jobs at the 
government labor exchanges be made compulsory upon em- 
ployers. Only in case a minimum period of employment of 
one month were guaranteed (subject to dismissal for mis- 
conduct, etc.) could employers hire men through other 
channels. 2 An equally strong plea for compulsion is made 

" Wages and the Mobility of Labor " {Economic Journal, March 1912, 
pp. 46-52) throws some light upon the probable reflex influence of 
greater mobility upon the elasticity of wages and upon the amount of 
unemployment, which is of particular interest in connection with Pro- 
fessor Pigou's analysis of unemployment as depending upon wage 
rates. In cases of increasing return, claims Mr. Bowley, the ultimate 
effect of mobility is to cause wages to rise to a higher level than pre- 
viously, in the better-paid districts. In cases of constant or diminish- 
ing return the rate of wages ultimately falls in the district of immi- 
gration. (Labor is assumed to flow from the regions of low wages to 
those of higher wages.) His conclusion as regards the amount of un- 
employment is that it will be diminished, and total employment will be 
increased, by increasing mobility of labor, provided that there is a 
possibility of increasing return, and that the local labor supply in the 
district of immigration is inadequate for the full development of the 
industries of the region. 

1 Minority Report, pt. ii, p. 261. 

2 Ibid., pp. 261-2. Cf. also the testimony of Sidney Webb before the 
Royal Commission on the Poor Laws (appendix, vol. ix, pp. 104-5). 



94 CONTEMPORARY THEORIES OF UNEMPLOYMENT [94 

by Beveridge. "If the thing cannot be done voluntarily it 
will have to be done, and will be done, compulsorily. A 
new clause in the Factory Code, e. g., that no man should 
be engaged for less than a week or a month unless he were 
taken from a recognized labor exchange, would be a legiti- 
mate and unobjectionable extension of the principle that 
the state may and must proscribe conditions of employment 
which are disastrous to the souls and bodies of its citi- 
zens," * The majority of the Poor Law Commission, it is 
worthy of note, report against such compulsion. 2 

Once it were secured that all casual labor was hired at 
but one center (or at several co-operating centers), the 
second step in the decasualization process could be taken. 
Upon certain men, selected on the basis of efficiency, em- 
ployment would be concentrated. ". . . . successive jobs 
under different employers should, so far as possible, be 
made to go in succession to the same individual, instead of 
being spread over several men, each idle half, or more than 
half, his time." 3 A definite number of regularly employed 
men, securing steady incomes, free of the demoralizing in- 
fluences of uncertainty and irregularity of work and in- 
come, would replace the heterogeneous mass of under- 
employed, irresponsible and industrially deteriorating 
casuals. 

The five elements in the problem of the labor reserve 
were noted above. 4 What will be the effect on each of 
such a policy — concentration of work through the agency 
of the labor exchanges ? The many separate centers of em- 
ployment are replaced by one center in each district. The 

1 Contemporary Review, April 1908, p. 392. (Quoted, Pigou, pp. 
159-60.) 

2 Report of Royal Commission on the Poor Laws, pt. vi, ch. 4. 

3 Beveridge, p. 201. 

4 Cf. supra, p. 85. 



95] CONTEMPORARY ENGLISH THEORIES 95 

lack of mobility of labor is transformed into " orgagnized 
fluidity." The short-term engagements continue (though 
employment for longer periods is encouraged by the com- 
pulsory employment at the labor bureau of short- job men) 
but many short-term jobs are combined, to give fairly reg- 
ular employment to the individuals securing work. There 
is still irregularity in the separate businesses, but their fluc- 
tuations can be used mutually to offset each other by dove- 
tailing through the exchanges. And, Anally, the vicious 
system of chance engagements, with its virtual premium 
upon personal irregularity, gives way to a method under 
which the strictest sort of personal responsibility can be 
enforced. With the policy of concentration of employment 
upon the minimum number necessary, the managers of the 
labor bureaus will soon weed out those held to be dishonest, 
inefficient and unreliable. 1 Only in such a policy as this 
(decasualization through a national system of labor ex- 
changes), says Beveridge, is to be found the remedy for 
" the most urgent part of the unemployed problem — the 
chronic poverty of the casual laborer." 2 

There remains for consideration the most important diffi- 
culty in the way of the enforcement of a decasualization 
policy — that of finding ways and means for the absorption 
of the surplus. For, inevitably, the concentration of em- 
ployment upon some means the complete displacement of 
others. 

Beveridge supports the decasualization policy on the gen- 
eral principle that " on any view of society, one man well 
fed and capable is preferable to two on half rations," 3 If 
the men forced out find work elsewhere, well and good. 
If they do not find work, it is either because they are ineffi- 

1 Cf. Minority Report, pt. ii, pp. 266-7. 

2 Beveridge, Unemployment, p. 201. 3 Ibid., p. 204. 



9 6 CONTEMPORARY THEORIES OF UNEMPLO YMENT [96 

cient or because there is an actual surplus of labor in the 
country. If inefficient, society should know it and should 
care for them, at least to the extent of preventing the bring- 
ing-up " in semi-starvation of fresh generations of ineffi- 
cients." If the forced-out men constitute a real surplus, 
they should be left no alternative but emigration. How- 
ever, Beveridge states, in the actual enforcement of de- 
casualization, discrimination as to the time and degree of 
application can be exercised. In good times it can be hast- 
ened; afforestation and other schemes providing fresh 
openings for labor can be utilized in the disposition of the 
surplus; emigration can be encouraged. His conclusion is 
that even though hardship on certain individuals be in- 
volved, the ultimate advantage of securing a minimum con- 
tinuity of employment for those who are left outweighs the 
temporary difficulties. 1 

The proposal to dispose of the surplus by means of emi- 
gration is made by various writers. Stanley C. Johnson, 
who has made a most intensive study 2 of emigration from 
the British Isles to the North American continent concludes 
that ". . . of all the members of our community who are 
at present unemployed, only a small section would be able 
to benefit by any system of emigration to America which 
might be proposed." 3 Mr. Johnson's conclusion is based 
upon the Webbs' analysis of the types of unemployed men 
and his own researches as to the qualities required for suc- 
cessful emigration. He quotes approvingly Mr. Herbert 
Samuel's reservation in the Report on Agricultural Settle- 
ments: "An increase of numbers has not added to the de- 
gree of unemployment. A decrease of numbers does not 

1 Cf. Beveridge, Unemployment, pp. 199-209. 

2 A History of Emigration from the United Kingdom to North 
America, 1763-1912 (London, 1913). 

3 Ibid., p. 303. 



97] CONTEMPORARY ENGLISH THEORIES 97 

promise to reduce it." 1 Holding that as yet there is no 
serious overcrowding, Mr. Johnson directly implies that 
the surplus resulting from decasualization can be utilized 
to advantage at home. 2 

This question of absorbing the surplus is taken up very 
comprehensively in the report of the minority of the Poor 
Law Commission. With the exception of Rowntree and 
Lasker, who touch upon the possibility of putting the sur- 
plus, or an equivalent number, upon the land, 3 the subject 
is not developed by other contemporary English authorities. 
The inclusion of a summary of the minority plan is, there- 
fore, deemed advisable. 

It is the belief of the Webbs and the subscribers to their 
report that " there exists in the United Kingdom today no 
inconsiderable surplus of labor — not, indeed, of workmen 
who could not with an improved organization of industry 
be productively employed, but of workmen who are, as a 
matter of fact, now chronically under-employed." 4 " The 
surplus of labor power which already exists in the partial 
idleness of huge reserves of under-employed men . . . will 
then (after decasualization) for the first time stand re- 
vealed and identified in the complete idleness of a smaller 
number of wholly displaced individuals." 5 Three social 
reforms are proposed, by the adoption of which, concur- 
rently with the adoption of the measures aimed at unem- 
ployment directly, the Webbs believe this surplus can be 
absorbed. 

1 A History of Emigration, op. tit., p. 305. 

2 The valuable statistics and comments which are given in Mr. John- 
son's book throw an interesting light on the emigration from the 
United Kingdom. Though its relation to unemployment and poor-law 
administration is not emphasized, material of value on these subjects 
is contained in the book. 

3 Rowntree and Lasker, Unemployment, p. 142; cf. also supra, p. 82. 

4 Minority Report, pt. ii, p. 268. 5 Ibid., p. 268. 



gg CONTEMPORAR Y THEORIES OF UNEMPLO YMENT [98 

I. The Halving of Boy and Girl Labor 
The evils of the system under which juveniles work, the 
tendency of modern industry to turn out boys as unskilled 
laborers, are emphasized throughout by the the minority. 
With the apprenticeship system broken down, it is claimed 
that the necessary training between the ages of fifteen and 
eighteen can only be provided by the community itself. 1 
The proposal of the authors is to " shorten the legally per- 
missible hours of employment for boys, and . . . (to) re- 
quire them to spend the hours so set free in physical and 
technological training." 2 If this plan were adopted at the 
same time as those aiming at the decasualization of indus- 
try, not only would the obvious and all-important educa- 
tional advantages be secured, but one-half of the employ- 
ment previously had by juveniles would be open to the men 
turned out by the decasualization process. 3 

2. The Reduction of the Hours of Labor of Railway and 
Tramway Servants 
While stating that a gradual reduction in the daily hours 
of labor is coming about, the authors state that this has 
little bearing on unemployment and none at all on under- 
employment. Though the working hours have in the past 
been reduced, " the number of men employed has not 
thereby been increased." 4 The Webbs do contend, how- 

1 Minority Report, p. 271. 2 Ibid., p. 272; cf. supra, p. 58. 

3 Ibid., pp. 274-5. 

* Ibid., p. 275. This is even more emphatically stated in Mr. Webb's 
closing address at the 1912 Conference on the Prevention of Destitu- 
tion. " He . . . emphasize (d) the fact that a reduction of the hours 
of labor could not do anything whatsoever to prevent the occurrence 
of unemployment. . . . The causes which produced unemployment 
would still go on, even if they reduced the hours of labor to four per 
day." (National Conference on the Prevention of Destitution (1912), 
Papers and Proceedings [London, 1912], p. 473). It is interesting to 
note the complete right-about-face that Mr. Webb has made in this 



99] CONTEMPORARY ENGLISH THEORIES 99 

ever, that in one great industry, that of the railway service, 
together with the allied omnibus and tramway services, the 
reduction of the present excessive hours would actually in- 
crease the number of men required, and thereby afford an 
opportunity for the absorption of some of the surplus labor 
resulting from the decasualizing process. 

3. The Withdrawal from Industrial Wage Earning of the 
Mothers of Young Children 
The " boarding out " of the children of widows and de- 
serted wives with their own mothers upon a stipend suffi- 
cient for their full support, with the consequent withdrawal 
of these women from industry, is urged as a third measure 
which will give openings for the absorption of the surplus. 
The inadequacy of the relief at present given under the 
poor law, combined with chronic under-employment of the 
husbands of many women with young children, has forced 
thousands of these persons into industrial life. Their with- 
drawal, which is of itself extremely desirable, should take 
place concurrently with the unemployment relief measures. 1 

regard. In The Eight Hours Day by Sidney Webb and Harold Cox 
(London, 1891) we find the following opinions expressed: "That a re- 
duction in the hours of labor, when it results in a diminution in average 
productivity, does result in the employment of additional workers is 
proved by innumerable instances" (p. 108). ". . . several instances of 
the beneficial results of limiting the hours of labor in this very matter 
of providing for the unemployed" are given in a footnote (p. 108). 
Again (p. 112), the authors speak of "the necessary absorption of a 
portion of the reserve army of' industry," the unemployed, and the 
partially employed which would result from an eight-hour bill. This 
contention which the Webbs at present hold to be fallacious is repeated 
in many places in this earlier work. 

1 Minority Report, pp. 278-80. Cf. also Prevention of Destitution, pp. 
132-7. Certain remedies for the evils of the casual-labor system, as 
well as for other factors in destitution, are proposed by Booth in his 
first report upon the conditions of the poor in London. Charles Booth, 
Life and Labour of the People in London, vol. i (first series), pp. 162- 
171. 



IO o CONTEMPORARY THEORIES OF UNEMPLOYMENT [ IO o 

7. THE PERSONAL EQUATION IN THE PROBLEM OF 
UNEMPLOYMENT 

There have been considered above those general factors 
in unemployment which are essentially industrial in their 
nature, which, as causes of unemployment, have at least no 
direct connection with the individual. It has been largely 
with the character of the demand for labor, and with 
changes in that demand, that the study has been engaged. 
The supply of labor, with reference to the bearing of the 
personal factor both on the volume of unemployment and 
upon the incidence of unemployment, is now to be con- 
sidered. 

This study of the relation of personal character to un- 
employment is greatly complicated by the fact that there is 
a strong reflex influence of unemployment and irregular 
employment upon the individual, a reaction which makes it 
difficult to state positively which is dominantly cause and 
which is primarily result — defective personality or unem- 
ployment. This difficulty, which will be referred to later, 
must be kept in mind in the following discussion. 

That personal deficiencies x do increase the total volume 
of unemployment is generally agreed upon, though Bev- 
eridge takes care to emphasize the relative unimportance of 
this factor, stating that ". . . no conceivable improvement 
in the character of workmen will eliminate the main eco- 
nomic factors in unemployment." 2 In two ways personal 
failings may increase the volume of unemployment. In the 
first place, gross unwillingness to work on the part of a 
parasitic class of criminals and vagrants, and the unwilling- 
ness of a grade of individuals slightly higher in the scale 

1 Physical incapacity is not included under the term " personal de- 
ficiency " as here used. 
* Beveridge, Unemployment, p. 138. 



IO i] CONTEMPORARY ENGLISH THEORIES I0 I 

to work continuously will obviously have this effect. 1 Sec- 
ondly, personal factors common in a greater or less degree 
to all men, such as lack of enterprise and lack of adapta- 
bility, increase the amount of unemployment by setting up 
frictions in the labor market. 2 This evil, though more diffi- 
cult to isolate and study than the first named, is none the 
less of importance. 

The unemployable class, who belong in the first division 
named above, have been objects of much discussion, and 
have been by some looked upon as the fundamental element 
in the whole problem of unemployment. A full discussion 
of this subject is beyond the scope of this paper, but certain 
diverse views as to the make-up of the class may be men- 
tioned. 

W. H. Dawson, in his book The Vagrancy Problem, 3 
classifies the unemployable into four types: the nomad 
vagabond, who lives by begging, blackmail and pillage; the 
settled resident loafer of the towns ; the intermittent loafer, 
who usually has a dependent family; and the female 
vagrant. 4 Mr. Dawson, whose strongly repressive policy 
of relief will be dealt with later, does not attempt to delve 
back into the causes for the existence of these types. 5 

1 Pigou omits from his book any discussion of these types, for, by 
his definition, unemployment means " involuntary idleness " only. 

2 Cf. Beveridge, p. 137. 

3 (London, 1910.) 

4 The Vagrancy Problem, pp. 2-5. 

6 There is a mass of literature in the field of vagrancy, a subject which 
can merely be mentioned here. C. J. Ribton-Turner, in A History of 
Vagrants and Vagrancy (London, 1887), gives an interesting study ot 
the tramp problem in England and in continental Europe. Josiah Flynt 
Willard's Tramping with Tramps (N. Y., 1901) is a fascinating picture 
of vagrant life in various countries as seen from within. The Report 
of the Departmental Committee on Vagrancy (London, 1906) records 
an intensive survey of vagrancy in Great Britain. 



IQ 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [i 02 

The minority of the Poor Law Commission approach the 
problem in another way, classifying the unemployable on 
the basis of the industrial route traveled before becoming 
units in this " wastage of the wage-earning class." 
Their analysis indicates a primary emphasis upon 
the reflex influence of periods of idleness as the cause of 
personal deficiencies. The first division consists of those 
who in the prime of life drop into the unemployable class. 
From the men who have lost permanent positions through 
industrial or business changes there is a small but steady 
stream. 1 From the " Men of Discontinuous Employment," 
making high wages while at work but with incessantly re- 
curring periods of idleness, the descent is more rapid. 2 
Personal weaknesses and shortcomings play a part here, 
giving the degenerating influences fuller play than they 
would otherwise have. It is the under-employed, however, 
who are the most prolific source of unemployables. 8 
Though individual weaknesses are of some importance 
here, also, the fundamental cause of degeneracy is the sys- 
tem under which the men of this class work. Charity Or- 
ganization Society workers testified : " It is not that the 
casual man has a larger dose of original sin than his fel- 
lows; it is that he is exactly what any other class in the 
community would become . . . were they submitted for 
any length of time to the same system of employment." 4 
The willingness of the wife to work, and the opportunity 
to keep her at work once she has started, are factors that 
were found to make the road to the unemployable class 
much easier to travel. 

The second source of unemployables, according to the 
minority analysis, is graduation from adolescence into that 

1 Minority Report, pt. ii, pp. 214-5. 2 Ibid., pp. 215-17. 

3 Ibid., pp. 217-18. 4 Ibid., p. 217. 



j 03] CONTEMPORARY ENGLISH THEORIES 103 

class. The general subject of " blind-alley " employment, 
lack of industrial training, and consequent demoralization 
has been considered above. 1 The men who gravitate into 
the unemployable class from the premature appearance of 
old age 2 form the third of the types of unemployables. 
This subject has also been touched upon, and need not be 
further considered here. 3 

Whatever the ultimate source of this class;, however, 
whether industrial disorganization or personal weakness, it 
exists and is a factor serving to increase somewhat the 
aggregate volume of unemployment occurring at any one 
time. 4 

In its effect upon the incidence of unemployment the per- 
sonal element is of obvious importance. The " selective in- 
fluence of personal character " is all pervasive. The weaker 
workers in factory, store or office are first turned out when 
industry or business slackens. Even in busy times it is the 
less efficient workers who form the " casual fringe " about 
all industries, and who bear the burden of the minor indus- 
trial fluctuations. Here again the unfortunate reflex influ- 
ence of the periods of unemployment is seen. Idle because 
of their weaknesses, these weaker brothers have their in- 
feriorities accentuated by their idleness. 5 Thus unemploy- 

1 Cf. supra, p. 54 et seq. 

2 Minority Report, p. 214. 

3 Cf. supra, p. 54. 

4 The number in the permanent vagrant class was placed at from 
20,000 to 30,000 in Great Britain as a whole, by the Departmental Com- 
mittee on Vagrancy which reported in 1006. The figures on this subject 
given by 'Rowntree and Lasker in their survey of York are interesting. 
They found important faults of character among 18.6% of the unem- 
ployed regular workers (pp. 54-5). Among the "work-shy," moral 
delinquency due to poor heredity, degrading environment, and faulty 
education was an outstanding feature (pp. 173-193). 

5 Cf. Beveridge, pp. 138-43. 



I0 4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [104 

ment and individual failings perpetuate each other in a 
vicious circle of cumulative interaction. 

8. PROPOSED REMEDIES FOR UNEMPLOYMENT DUE TO 
PERSONAL FAILINGS 

The first step to be taken in the campaign against the un- 
employables is the elimination of those factors which are 
manufacturing, say the minority, 1 a new generation of this 
class every ten or twelve years. Proposed reforms to 
accomplish this end include industrial training, and all 
those perfections of industrial machinery " which increase 
a man's chance of getting work, and which improve his 
condition when unemployed and reduce the likelihood of 
demoralization." 2 

Through these reforms in industrial machinery, more- 
over, especially through the organization of the labor mar- 
ket, the problem of the unemployable can be isolated. De- 
casualization will make it impossible for the semi-unem- 
ployable to work two or three days a week. The incompe- 
tent casual will be forced out of industry and the necessary 
disciplinary treatment can be given him. 3 Vagabond wan- 
dering can be prevented, since the excuse of seeking em- 
ployment cannot be given if transportation is advanced 
through the labor exchanges to all men securing positions 
in outlying parts of the country. 4 By making registration 
at the labor exchange a prerequisite to the receipt of any 
form of public assistance, the personal responsibilty of hus- 
band and father can be brought home, and this more subtle 
form of vagrancy eliminated. 5 

1 Minority Report, pt. ii, p. 214. 

2 Rowntree and Lasker, Unemployed, p. 198. The latter measures, 
dealing with men while unemployed, are discussed below (pp. 113-117) ; 
the general reforms referred to have been outlined above. 

3 Cf. Beveridge, p. 215. 

4 Minority Report, pt. ii, p. 265. 5 Ibid., pp. 266-7. 



I0 5] CONTEMPORARY ENGLISH THEORIES 105 

With industry thus organized so that the unemployable 
is marked off, and steps taken to prevent the re-creation 
of the type, the problem of dealing with the present 
generation of the " work-shy " remains. As to remedies 
we have a rather sharp division into camps, though there 
is some considerable area of common agreement. 

A system of detention colonies to be used in conjunction 
with the voluntary training schools and farm colonies for 
the unemployed 1 is generally agreed upon as necessary. 
The difference of opinion comes in regard to the character 
and administrative policy of these colonies. On the one 
side stand the Departmental Committee on Vagrancy, which 
reported in 1906 after a searching investigation, and the 
majority of the Poor Law Commission of 1909. The gen- 
eral principle on which they stand, that of repression, is 
voiced by W. H. Dawson: ". . . society is justified, in its 
own interest, in legislating the loafer out of existence." 2 
To attain this end, forced labor colonies modeled on conti- 
nental plans and administered by the police as penal insti- 
tutions are recommended. Short sentences are deprecated, 
committal of vagrants for from six months to three years 
being urged. The existing casual wards, except insofar as 
transitionally necessary, are to be discontinued, cheap hotels 
for genuine wayfarers taking their place. Within the colo- 
nies men are to be engaged in industrial and agricultural 
trades, though competition with free industry is to be 
avoided. 3 

1 This subject is closely allied to that dealing with the general treat- 
ment of unemployed men (infra, pp. 113-117), but it is deemed best to 
consider it at this time. In practice the administration of the two 
systems might be closely connected. 

2 Vagrancy Problem, p. ix. 

8 The Departmental Committee on Vagrancy, The majority of the 
Poor Law Commission, and W. H. Dawson are, with slight differences 
of opinion, agreed on this general type of treatment. For a summary 



I0 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ io 6 

Leaning toward a somewhat less severe policy, aiming 
not to punish but rather to cure the men of this class of the 
" morbid frame of mind " which has caused them to be- 
come " work-shy," the minority propose detention colonies 
similar in their general constitution to those referred to 
above but administered primarily as training establishments 
and having nothing to do with the police authorities. 1 Con- 
tinuous employment is to be given and rigorous discipline 
is to prevail. Good conduct will be rewarded by promotion 
to one of the free training establishments. A similar 
method of dealing with vagrants was advocated by Edmond 
Kelly. 2 He emphatically emphasized the reformation side 
of the work and urged the absolute separation of the colo- 
nies from both penitentiaries and workhouses. 

As to the treatment of the problem of the personal factor 
in unemployment there are, thus, certain differences of 
opinion, but the broad path of general policy is clear. The 
industrial conditions creating the type need to be dealt with ; 
by means of better labor market organization the present 
generation of " work-shys " should be isolated for separate 
treatment; these should be subjected to* rigorous disciplinary 
detention, with training aiming at regeneration of those who 
can be re-made into efficient workers. Those personal fail- 
ings in all workers which increase the frictions of industrial 

of the report of the former, cf. Dawson, The Vagrancy Problem, pp. 
231-45. Dawson's own plans are detailed on pp. 62-103 of the same 
book. The recommendations of the majority of the Poor Law Com- 
mission appear in their report, vol. i, pp. 548-9. 

1 Minority Report, pt. ii, p. 308. The earlier attitude of the Webbs 
toward the problem of the unemployable is expressed in Industrial 
Democracy, pp. 784-9. Though no specific remedial measures are sug- 
gested, the necessity of isolating the problem before it can be ade- 
quately dealt with is emphasized. 

s The Unemployables (London, 1907). Especially valuable for the 
discussion of the labor-colony system, which is strongly advocated. 
Cf. pp. 36-51 for material on English remedies. 



IQ 7] CONTEMPORARY ENGLISH THEORIES ioy 

movement and adaptation, and therefore increase somewhat 
the aggregate volume of unemployment, may in part be elimi- 
nated by some such measures as will be touched upon, 1 but 
reform in this direction involves deeper considerations than 
those concerned with the particular problem of unemploy- 
ment. 2 

9. UNEMPLOYMENT INSURANCE 

In a dynamic industrial state unemployment cannot be 
prevented. Business and industrial activity involve indus- 
trial changes, and a certain amount of unemployment is a 
necessary accompaniment of these changes. That great 
amount of unemployment which exists today and that mini- 
mum of unemployment which will persist must be dealt 
with by other than merely preventive measures which aim 
at industrial reformation. Theories as to the methods of 
providing for individuals during periods of unavoidable 
unemployment are of two types — those dealing with insur- 
ance against unemployment and those concerned with public 
relief measures. 

As to the advisability, on principle, of unemployment in- 
surance, there seems to be little argument. Given the facts, 
as Mr. Chio'zza Money points out, s that manual work is for 
the most part inherently irregular, and that uncertainty of 

1 Cf. infra, pp. 113-117. 

2 W. C. D. Whetham, in a lecture on " Eugenics and Unemployment " 
(Cambridge, 1910), discusses the relation of racial breeding to pauper- 
ism and unemployment. He believes that these problems can only be 
solved finally by an improvement in the " innate character of the popu- 
lation." Considerable material on the general subject of the treatment 
of vagrancy in Britain and other countries is contained in a Special 
Consular Report on Vagrancy and Public Charities in Foreign Coun- 
tries issued by the Bureau of Statistics of the Department of State 
(Washington, D. C, 1893). The disorganized form of presentation of 
the valuable matter it contains materially lessens its usefulness. 

3 L. G. Chiozza Money, Insurance versus Poverty (London, 1912), pp. 
3H, 317. 



I0 8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [108 

maintenance due to an irregular income is demoralizing in 
the extreme, it is incumbent either upon the workers or 
upon society to afford regular payment for irregular work. 
That this should be done through some form of insurance 
follows from the limited savings of the individual, the im- 
possibility of prophesying individual risks, and the converse 
possibility of averaging, and thus foreseeing the risks in- 
curred by a body of men. 

I. G. Gibbon states that three conditions are necessary 
for the application of the principle of insurance : 1 first, it 
must be possible to foretell the amount of the risk for the 
group which is to be insured ; second, the risk must be gen- 
eral to the members of the group ; third, it must be possible 
to prevent fraud. Gibbon contends that though there are 
few trades in which the exact fluctuations of employment 
can be foreseen, and though changing industrial conditions 
in the future may change the risk, it is possible, with a 
broad margin of error, to secure statistics on which insur- 
ance premiums can be based. The majority of the Poor 
Law Commission, while condemning the idea of general 
unemployment insurance, because of the extreme variations 
in risk and the probable preponderance of " bad risks," be- 
lieve that trade-group insurance is possible, because the risk 
within a given trade is susceptible of fairly exact measure- 
ment. 2 This view that within a given trade sufficient actu- 
arial certainty for insurance can be secured is held by most 
of the English authorities on the subject, 3 but constant at- 
tention, and readiness to change rates with greater experi- 
ence are advised. That voluntary insurance in the past has 

1 I. G. Gibbon, Unemployment Insurance (London, 1911), pp. 14-19. 

2 Report of the Royal Commission on the Poor Laws, pt. vi, ch. 4. 

3 Cf. Encyclopedia Brittanica, nth ed., vol. 27, pp. 578-80. H. Llewel- 
lyn Smith, Secretary to the Board of Trade, is quoted on the subject 
Cf. also Chapman and Hallsworth, Unemployment in Lancashire (Man- 
chester, 1909), p. no. 



109] CONTEMPORARY ENGLISH THEORIES 109 

been successfully worked out on trade lines substantiates 
this argument. The present English insurance scheme, as 
was noted above, 1 rests on a trade basis. 

The second condition, that the risk must be general to 
the members of the group, is only partially fulfilled as re- 
gards unemployment. Statistics of benefits paid by certain 
trade unions are evidence that unemployment falls more 
heavily upon the " weaker brothers " within a group. Year 
after year certain individuals exhaust their benefit, while 
others draw little or none. But these delinquent members 
tend to be squeezed out in time ; and even though the light- 
ning strikes some continuously, all are subject, in greater 
or less degree, to periods of idleness. 2 So again, with a 
margin of error, the general requirements for insurance are 
met in the trade group. 3 

The third possibility which would make the method of 
insurance inapplicable is that of fraud. If malingering on 
a large scale is possible, the whole scheme would obviously 
break down. If the insurance be voluntary, by trade unions, 
it is largely possible to prevent this, through the pressure 
of opinion and the knowledge of trade openings on the 
part of the members generally. Fraud of this kind, how- 
ever, is one of the chief obstacles to government schemes. 
The best way of combating it is through the full utilization 
of a labor-exchange system by those administering the in- 
surance. Voluntary idleness under the pretence of work 
would not be possible were a government office seeking out 
vacancies. Such close co-operation between the insurance 
officials and the labor-exchange managers is provided for 
by the National Insurance Act of 191 1. The broad con- 
clusion reached by the English students, then, is that un- 

1 P. 38. 

2 Cf. Beveridge, Unemployment, pp. 140-2. 

3 Cf. Gibbon, pp. 16-18. 



IIO CONTEMPORARY THEORIES OF UNEMPLOYMENT [no 

employment 1 is an insurable risk. While individuals may 
point to faults or inadequacies in any particular system, or 
even weaknesses in the method itself, 2 the consensus of 
opinion is that insurance in one form or another is needed. 
As Beveridge says, it is a direct, flexible and immediate 
method of relieving unemployment, while it enables the 
burden of an expense necessary to industry to be borne col- 
lectively instead of individually. 8 

On the question as to whether the state should assist in 
insurance against unemployment, there is again a fairly 
uniform agreement. The inability of a large majority of 
the workers to make this provision for themselves is per- 
haps the best reason for such assistance.* Again, as a 
matter of self-protection it is urged that the state should 
assist, for if the money is not spent in this way it will have 
to be spent in relief work in another form, the beneficial 
effects of which are not so certain. Habits of providence 
and co-operation, moreover, are said to be stimulated by the 
encouragement of insurance schemes. From another point 

1 Unemployment due to trade disputes and to a few other specified 
causes is not considered to warrant the payment of benefit. 

2 The Webbs, in The Prevention of Destitution, emphasize the limita- 
tions of insurance. It does not prevent unemployment, and should 
not be considered an alternative to preventive measures. By lessening 
the distress accompanying unemployment it may, they say, actually 
lead to an increase in the evil itself (pp. 159-63). Rowntree and 
Lasker, in a joint paper, point out the wide field that cannot be touched 
by such measures; Revue Internationale du Chomage (Paris, 1911), pp. 
147-8. 

3 Beveridge, Unemployment, pp. 225-7. 

* Mr. Money estimates that in 1908 there were 17,050,000 manual 
workers and small salary earners in Great Britain. Of these, about 
700,000 belonged to trade unions providing unemployment benefits. 
One million two hundred and fifty- four thousand pounds was ex- 
pended on unemployed benefits in that year, an average of one pound 
and fifteen shillings per member ; Insurance versus Poverty, pp. 3 J 5-7. 



Ill] CONTEMPORARY ENGLISH THEORIES 1 1 1 

of view such public aid is advocated, for it is contended 
that only when the state feels the financial pressure of un- 
employment will preventive steps (such as the regulariza- 
tion of expenditures) be taken. As an abstract matter of 
justice, Gibbon holds, public assistance should be given. 
Unemployment is characteristic of present social and in- 
dustrial organization; it is a community, not an individual 
matter, and therefore the community should aid in the 
bearing of the burden. 1 

A dissenting opinion on this subject is advanced by S. J. 
Chapman, of the University of Manchester. Holding that 
the personal equation would " undermine the actuarial 
bases " of insurance, that the chance of fraud would be too 
great, and that the subsidizing of trade-union insurance 
would necessitate the state upholding trade-union policies 
and standards, Professor Chapman maintains that any form 
of insurance in which the government attempts to take a 
part is inadvisable. Only that insurance against unemploy- 
ment which is wholly provided and administered by the 
trade unions themselves is considered practicable. 2 

The limits of this paper would be exceeded by a full dis- 
cussion of the different types of unemployment insurance 
which have been practised or proposed. As to the relative 
merits of the two general types, voluntary and compulsory, 
and the various species of each, there has been much dis- 
cussion. An autonomous voluntary scheme, that is, one 
established and maintained by the workmen themselves, 
was the only type prevailing in England previous to the pas- 
sage of the National Insurance Act. That act provided 
compulsory insurance within certain trades, contributions 
to be made by employers, employees and the state, and re- 

1 Cf. Gibbon, Unemployment Insurance, pp. 229-30, for a summary 
of reasons advanced for public aid. 

2 Brassey and Chapman, Work and Wages (London, 1908), pt. ii, 
"Wages and Employment," pp. 325-36. 



H2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [n 2 

enforced the voluntary schemes by providing governmental 
subsidies. The latter method of subsidizing autonomous 
schemes is the well-known Ghent plan. Admittedly an ex- 
periment, the English system is thus affording an oppor- 
tunity for the trial of two directly opposite types of insur- 
ance. The outcome of the trial will undoubtedly shape 
future policy beyond as well as within the British Isles. 1 

1 I. G. Gibbon comes out unreservedly in favor of the Ghent system 
of subsidies — of "helping self-help." Comprehensive descriptions of 
the continental methods of insurance are included. 

The minority of the Poor Law Commission strongly recommended a 
similar form of subsidizing trade unions paying out-of-work benefits 
(pt. ii, pp. 288-93). 

The majority, while making no specific recommendations, urge that 
in any form adopted the existing trade organizations be utilized; 
Royal Commission on the Poor Laws, pt. vi, ch. 4. 

Public subventions for supplementing the benefits of trade associa- 
tions are also recommended by David F. Schloss {Insurance Against 
Unemployment, London, 1909), whose book contains a summarized 
description of all existing methods. 

An ardent advocate of compulsion, as the only method of helping 
those who most need it, and a strong supporter of the Act of 191 1, is 
found in Mr. Chiozza Money, to whose book reference has been made 
{Insurance versus Poverty). It contains the text of the National In- 
surance Act, with full explanations. 

A brief symposium of views on the subject, with particular refer- 
ence to the Act of 191 1, is included in the Revue Internationale du Cho- 
mage (Paris, 191 1), pp. 127-152. I. G. Gibbon, J. A. Hobson, and 
Rowntree and Lasker contribute notes. 

The Report of the Special Committee on Unskilled Labor (London, 
1908) points out the absolute necessity of an efficient labor-exchange 
system for the success of unemployment insurance schemes. The com- 
mittee recommend no particular plan, because a national system of 
labor exchanges was not in sight at that time (pp. 66-77). 

Cyril Jackson, who investigated unemployment for the Royal Com- 
mission on the Poor Laws, publishes his personal views in Unemploy- 
ment and Trade Unions (London, 1910). His conclusion concerning 
insurance is expressed in no uncertain words : " A subsidy to trade 
unions is therefore not only the easiest but also the sole effective 
method of unemployment insurance" (p. 39). The central thesis of 
his book is that the solution of the problem of unemployment is to be 
found only through governmental co-operation with trade unions 
{cf. p. 85). 



113] CONTEMPORARY ENGLISH THEORIES 113 

10. THE RELIEF OF THE UNEMPLOYED 

Before a national insurance act, universal in scope, can 
be worked out there will be actual destitution due to unem- 
ployment to be faced ; even though such a universal measure 
be applied, there will always remain some whom it cannot 
reach. So relief of more direct character is immediately 
necessary and will probably always be needed. The various 
recommendations concerning the character which such re- 
lief should take in the future will be briefly enumerated. 1 

The Report of the Poor Law Commission contains a com- 
prehensive set of suggestions dealing with the able-bodied 
unemployed. Three principles which are to dictate action 
on their behalf are laid down. They are co-operation (be- 
tween all agencies dealing with the unemployed), discrimi- 
nation (between unemployed individuals), and restoration. 2 
The proposed mechanism of relief is as follows : 

Any individual who cannot be immediately helped 
through the labor exchanges and who has no unemployment 
insurance benefit accruing will be first assisted, if possible, 
by voluntary aid organizations. The commission suggests 
these voluntary committees as a means of mobilizing local 
personal service and fully utilizing privately subscribed 
funds. 3 These will give the temporary assistance to man 
and family which is often all that is required for tiding over 
brief spells of idleness. Behind this voluntary body will 
stand the public assistance authority. Those appealing to 
this body will be classified on the basis of their physical 
condition, technical training and industrial record. Those 

1 Relief measures now taken under the Poor Laws and under the 
Unemployed Workman Act were sketched above (pp. 26-31, 31-36). 

2 Report of the Royal Commission on the Poor Laws, pt. vi, ch. 4. 

3 For a full description of these committees, which make up an im- 
portant part of their proposed machinery for charitable relief, see the 
Commission's Report, pt. vii. 



! I4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [114 

whose condition and character are such that they require 
merely temporary maintenance will be given either assist- 
ance at home in return for daily work, partial home assist- 
ance, the man, but not his family, being kept in an institu- 
tion, or full institutional assistance, both man and family 
being helped at an industrial or agricultural institution. 
The second class consists of those who would not be helped 
by merely temporary assistance, but require a prolonged 
period of training. For these persons, whose restoration 
to industrial efficiency is sought, industrial and agricultural 
institutions and labor colonies similar to the best of those 
which have been tried in the past would be provided. The 
third class specified by the majority are those " unemploy- 
ables " who require detention and discipline. The Poor 
Law Commission's recommendations concerning their treat- 
ment have been outlined. 1 

This constitutes their complete permanent program. 
However, pending the full development of the measures 
suggested, the prosecution of public works by the local 
authorities, financially assisted by the board of trade, is rec- 
ommended for periods of acute distress. 2 

One of the vital points connected with the program of 
the majority is that all those who receive assistance, other 
than medical, for three months or more during the qualify- 
ing year are to be disfranchised. 3 To this the minority 
take strong exception. 

" Maintenance under Training " is the caption under 
which the minority advance their relief recommendations. 
Their plan of treatment is based upon the belief that " the 
capacity of the industrial system to absorb fresh labor is 

1 Cf. supra, pp. 27, 28. 

2 A full statement of the views of the majority is given in the Report 
of the Royal Commission on the Poor Laws, pt. vi, ch. 4, and pt. ix. 

3 Ibid., pt. vi, ch. 4. 



115] CONTEMPORARY ENGLISH THEORIES uc 

far from exhausted, but this capacity depends entirely upon 
the labor being . . . suited to the particular developments 
of the time." 1 To bring about the industrial regeneration 
necessary for many of the unemployed, a system of free 
training establishment and of detention training colo- 
nies is advocated, the former designed only for men who 
can be made fit to resume their places in industrial employ- 
ment, the latter for the " work-shy." 2 Admission to the 
free establishments is to be optional with any unemployed 
man, but public assistance of any kind will only be given to 
the families of such able-bodied men as do attend. The 
curriculum would include strict physical training and the 
complete industrial overhauling of each individual ad- 
mitted. If in an outworn trade he would be taught other 
work; if a poor workman in a flourishing trade, the train- 
ing given him would be designed to make him an efficient 
workman in that trade. Maintenance for each man and his 
family would be provided out of the public funds during 
this period of training. By close co-operation with the 
national labor bureau each man would be placed as soon 
as opportunity offered and the degree of his efficiency justi- 
fied it. 3 

Relief works for the unemployed, that is, the carrying-on 
of public works on which they can be employed, are con- 
demned by the minority as over-costly, degenerating in the 
effects on the individual, and as " representing only a coun- 
sel of despair." 

The outstanding point of difference between the majority 
and minority proposals in this regard is that the latter rest 
upon the fundamental belief that all work with the able- 

1 Minority Report, pt. ii, p. 300 (quoted). 

2 Cf. supra, p. 27. 

8 Minority Report, pt. ii, pp. 293^308. 



H6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [n6 

bodied should be taken completely away from the poor-law 
authorities and placed under a ministry of labor. It is an 
administrative proposal of far-reaching importance, but 
apparently one which is not to be acted upon by Parliament. 

An inconspicuous provision in the National Insurance 
Act may pave the way for important future advances in the 
training of inefficients. Article ioo states that if an insur- 
ance officer considers that the skill or knowledge of a work- 
man is defective, but that these defects may be remedied 
by technical instruction, he may " pay out of the unemploy- 
ment fund all or any of the expenses incidental to the pro- 
vision of the instruction, if he is of opinion that the charge 
on the unemployment fund in respect of this workman is 
likely to be decreased by the provision of the instruction." 
What may be done in the future under the provision of 
this article is uncertain, but the possibilities are striking. 

Beveridge touches very briefly on the relief which should 
be accorded the unemployed. That such relief should 
be administered under the poor law, that the line between 
industry and relief should be sharply drawn, and that 
it should aim at the restoration to physical vigor and tech- 
nical skill of those capable of it, he makes clear, however. 1 

1 Beveridge, Unemployment, pp. 232-4. 

For interesting accounts of labor colonies, see three articles in Papers 
and Proceedings, National Conference on the Prevention of Destitu- 
tion (London, 1911), pp. 482-493, 499-509- 

J. A. Hobson discusses labor colonies and similar institutions in The 
Problem of the Unemployed, pp. 131-45. He considers such attempts 
to be very far from a real solution of the problem at issue, though 
of possible value in a small way. 

Professor Chapman weighs the relative advantages of labor colonies 
and relief works for unemployed men in Work and Wages, pt. ii, pp. 
336-48, 372-84. 

A general conclusion in favor of restorative training is reached by 
Pigou in his chapter on the "Relief of the Unemployed;" Unemploy- 
ment, pp. 228-41. 

A chapter on the " Public Provision of Work," which is valuable be- 



H 7 ] CONTEMPORARY ENGLISH THEORIES ny 

The chief methods recommended for caring for men 
while unemployed have been touched upon in this section 
and throughout the paper. To detail at greater length sim- 
ilar recommendations, of which there are many, is unneces- 
sary. What is aimed at in them all is the maintenance of 
families in good health while the wage-earner is idle, the 
prevention of demoralization, and, if possible, the industrial 
regeneration of those needing it and capable of such res- 
toration. Such relief measures, combined with deeper- 
going reforms which aim to organize English industrial 
life, may well furnish the basis for a scientific campaign 
looking toward the elimination of the distress which has in 
the past accompanied unemployment and under-employment. 

cause of the detailed local statistics given, is contained in Chapman 
and Hallsworth, Unemployment in Lancashire, pp. 115-33. 

Edmond Kelly's, The Un employables, which was referred to above, is 
exclusively devoted to the treatment of labor colonies as agencies for 
the training and regeneration of unemployed men of the lower types. 



CHAPTER III 

The Development of American Unemployment 
Theory and Remedial Practice 

i. miscellaneous types of early theory 

Intensive study of the problem of unemployment is a 
very recent development in the United States. Severe un- 
employment there was at various times during the latter 
half of the nineteenth century, and the problem of vagrancy 
has been virtually a permanent one since the Civil War. 
Though these conditions called forth nothing approaching 
a scientific analysis, the spectacle of large numbers of able- 
bodied men out of work during periods of industrial in- 
activity did cause brief flurries of excitement, characterized 
by generalizations of hobby-ridden individuals as to the 
causes of the phenomenon, and by appeals for immediate 
remedies essentially of a superficial character. The former 
constitute a considerable portion of the early American 
literature on the subject. 

A striking example of this early type of theory is the 
" Labor Exchange " idea, which was rather extensively 
circulated from 1890 to 1898. Believing that unemploy- 
ment and the like ills that beset the world were the result 
of the use of a metallic exchange medium which was scarce 
and hard to obtain, certain individuals formed a " National 
Labor Exchange" at Independence, Missouri, in 1890. It 
was designed to afford work for all by enabling everybody 
to exchange directly the things he produced for the things 
he needed. Labor, represented by a paper currency, was to 
118 [118 



II9 ] AMERICAN UNEMPLOYMENT THEORY no, 

be the medium of exchange. It was announced in 1897 that 
300 branches with a total membership of 15,000 had been 
set up. The movement apparently died shortly afterward, 
however, for no trace of it appears after 1898. 1 

Similar in some respects is the conclusion reached by 
Hugo Bilgram, who asserts, after an involved argument, 
that business stagnation and involuntary idleness can be 
prevented by the issue of credit money. 2 

As early as 1871 Henry George was attacking land 
monopolization in California. 3 In 1878, lecturing on Why 
Work is Scarce, Wages Low, and Labor Restless, 41 he 
specifically named the monopoly of land as the cause of 
unemployment, and advocated the single tax as a method 
of relief. He takes occasion at the same time to deny that 
the influx of Chinese, to which unemployment was popu- 
larly attributed, was the root cause of the lack of work. 
In Progress and Poverty, 6 his theory is outlined at length. 
The Malthusian doctrine of a tendency toward a surplus 
population is repudiated, 6 George asserting that productive 

1 Information concerning this interesting movement is contained in : 
The Labor Exchange Quarterly, July 1896, vol. i, no. 1 (Independence, 
Mo.) ; G. B. DeBernardi, Trials and Triumphs of Labor (Independ- 
ence, Mo., 1896) ; J. A. Kinghorn- Jones, How We May Dispose of 
Our Surplus Products and How We May Employ Our Surplus Labor 
(San Francisco, 1898); B. J. Sharp, Labor Exchange in a Nutshell 
(Salem, Oregon, 1897) ; E. Z. Ernst, The Progressive Handbook of 
the Labor Exchange (Olathe, Kansas, 1894) . 

5 Hugo Bilgram, Involuntary Idleness (Philadelphia, 1889). Mr. Bil- 
gram's book is an elaboration of a paper presented to the American 
Economic Association. 

* Henry George, Our Land and Land Policy, National and State (San 
Francisco, 1871). 

4 Lecture delivered in Metropolitan Temple, S. F., March 26, 1878. 
Pamphlet printed for the Land Reform League. 

6 (San Francisco, 1879.) 

Ibid., bk. ii, " Population and Subsistence," pp. 81-136. 



J20 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I2 o 

forces can keep pace with population. ". . . in any given 
stage of civilization a greater number of people can produce 
a larger proportionate amount of wealth and more fully 
supply their wants than can a smaller number." x The 
single tax and the accompanying reforms which are to 
remedy the " unequal distribution of wealth based on the 
institution of private property in land " are fully explained 
in this later work. 

The second type of literature concerned with the problem 
of unemployment, previous to the introduction of the more 
intensive methods of study of recent years, is that coming 
from men personally in touch with the unemployed. On 
the purely descriptive side there is such work as Josiah 
Flynt Willard's realistic narratives of American tramp 
life, 2 and W. A. Wyckoff's portrayal of a winter among 
the unemployed of Chicago. 3 More critical in their nature 
are the contributions of those writing from the point of 
view of charity administration. John Graham Brooks gives 
us one of the earliest papers on the unemployed written 
from this standpoint. 4 He states frankly that he ". . . . 
cannot think it of prime importance to search for the causes 
of poverty and want of work," and confines his treatment 
largely to an exposition of the necessity of a change in the 
form of charity and a discussion of certain proposed 
methods of dealing with the unemployed. Four measures 
are suggested: employment bureaus, graded work tests, 
trade schools for giving skill and capacity to the incom- 
petent, and compulsory farm colonies and work-shops. 

1 Henry George, op. cit., p. 134. 

2 Josiah Flynt, Tramping with Tramps (N. Y., 1901). 

3 W. A. Wyckoff, The Workers— The West (N. Y., 1898), pp. 1-146. 

4 Annals of the American Academy of Political and Social Science, 
" The Future Problem of Charity and the Unemployed," July 1894, pp» 
1-27. 



I2 i] AMERICAN UNEMPLOYMENT THEORY i2 i 

Certain of these, it will be noted, are the remedies proposed 
today. But Brooks' analysis of the problem to be met, 
though he states that he is not searching for causes, is fun- 
damentally different from that of modern students. He is 
reasoning throughout from the individual, rinding the cause 
essentially in the individual and in the individual's " three 
great passions — the sexual, gaming, and drink." This ap- 
pears unmistakably when he states that " This dead-beat 
crowd by any test that we apply to it is our greatest 
plague." x The point is emphasized here because it is char- 
acteristic of all the earlier approaches to the study of this 
question. 2 

The same point of view is apparent in another early 
study, though a somewhat deeper analysis is made in 
this paper. J. J. McCook, speaking on " The Tramp Prob- 
lem, 2 explains its development in this way: When an in- 
dustrial slump occurs, the young unmarried men, usually 
those a trifle irregular because of tendencies toward drink- 
ing, are first turned out by the employers. In seeking work 
elsewhere, a taste of wandering life is experienced. When 
times become better these men have become accustomed to 
the life of the vagrant and will not return to industry. 
Severe laws, which leave the fundamental problem un- 
touched, may scatter them but do not regenerate them. 
The remedies are to be found in the prohibition of heavy 
drinking, measures to prevent people from discovering that 
they can live without work, the passage and enforcement 
of good laws, the " abolition of industrial booms, financial 
crises, business slumps, and hard times," the encouragement 

1 Annals of the American Academy of Political and Social Science, 
op. cit., p. 25. 

2 Cf. supra, p. 22 et seq. 

3 Proceedings of the National Conference on Charities and Correc- 
tions, Twenty-second Annual Session, 1895, pp. 288-301. 



I2 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I2 2 

of marriage, the prevention of train- jumping, and the estab- 
lishment of reformatory institutions. 

" The man who does not desire to work, who prefers to 
eat his bread in the sweat of some other man's brow," is 
the subject of a paper by Washington Gladden, who so 
defines the " Workless Man." 1 An adequate work test is 
looked upon by Gladden as the essence of the correct rem- 
edy. Once having established this work test, four other 
measures are proposed : Workhouses are needed in the 
cities and farm colonies in the country ; training in the arts 
of industry should be included in early education; tem- 
porary employment for the industrial and capable among 
the unemployed should be provided by the state; breeding 
by paupers should be made impossible. 

Somewhat later in point of time and characterized by 
relief proposals somewhat broader in their scope, but with 
the same emphasis on individual fault, is Edward T. De- 
vine's analysis in Principles of Relief. 2 Speaking of able- 
bodied men applying for assistance, he says : " Lack of 
employment, which, at the time of application, is given in 
the great majority of instances as the reason for being in 
need, is usually found, on inquiry, to be due to some per- 
sonal deficiency in the employee. He has been discharged 
for intemperance, for inefficiency, for inability to meet the 
demand upon him, or for some objectionable trait." 3 De- 
vine does state that in a certain proportion of instances the 
lack of employment is due to industrial causes, of which he 
enumerates ". . . the introduction of machinery, changes 
in methods of industry, a f alling-off in the demand for par- 
ticular commodities, disturbances of credit, and the . . . sub- 

1 Washington Gladden, " What to Do with the Workless Man." Pro- 
ceedings of the National Conference on Charities and Corrections, 
Twenty-six Annual Session, 1899, pp. 141-152. 

2 (N. Y., 1904.) 3 Ibid., p. 151. 



123] AMERICAN UNEMPLOYMENT THEORY 123 

stitution of new management in a particular industry. . ." 
Five possible measures of assistance are mentioned by De- 
vine. They are the use of employment agencies and news- 
paper advertisements, direct appeal to possible employers of 
labor and co-operation with the trade union, the creation of 
industrial colonies or industries in which those who cannot 
be placed in regular employment may become self-support- 
ing, the use of temporary industries, such as woodyards, 
and the giving of duly safeguarded material relief. 1 An- 
other measure, a varied manual training in youth, is men- 
tioned incidentally as a means for enabling workers to meet 
enforced industrial changes with less suffering. 

In considering Devine' s reasoning and his recommenda- 
tions, as well as those of others engaged in charity work, 
the fact must be borne in mind that they are speaking, in 
the main, of a particular class of the unemployed, those 
who apply for relief at charity headquarters. Neverthe- 
less, a statement such as the following links up this analysis 
with those others in which the problem of unemployment is 
an individual problem. " The first principle to be recog- 
nized is that the obligation to find employment, like the 
obligation to continue suitable employment when one has it, 
rests primarily upon the applicant himself." 2 

The works summarized above, which represent the opin- 
ions of the ablest of those connected with charity adminis- 

1 Devine, op. cit., p. 161. 

3 Ibid., p. 152. Reference is made below to later works by Devine. 
A very obvious shift of emphasis from the individual to society and 
industry as basic sources of unemployment and vagrancy will be noted. 

Another study of vagrancy, comprehensive, but emphasizing individual 
faults essentially, and looking primarily to the taboo, to repressive 
legislation as the remedy, appears in the Annals of the American 
Academy of Political and Social Science (May 1004), vol. xxxiii, no. 3, 
PP. 37-48. Benjamin C. Marsh, " Causes of Vagrancy and Methods 
of Eradication." 



I2 4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [124 

tration a decade or more ago, will serve to depict the gen- 
eral views of this class of workers. From them we turn to 
a brief review of work done in another field, that of theory. 1 

2. THE EARLY AMERICAN ECONOMISTS ON UNEMPLOYMENT 

The absence of an intensive analysis of unemployment 
which characterized the two types of writers mentioned 
above is also notable in the works of the early American 
economists. The Malthusian doctrine of a surplus popula- 
tion is a bone of controversy; the relation of the mobility 
and adaptability of labor to wages is considered ; the effect 
of the introduction of machinery on the number of men em- 
ployed is referred to; but unemployment as a distinct prob- 
lem is not studied. Certain points of value to the present 
study are made, however, by some of these earlier thinkers. 

The works of H. C. Carey contain a suggestive treatment 
of certain of the general factors involved in the problem 
being considered. Malthus' contention that population 
can outstrip the means of subsistence, and that unemploy- 
ment and misery are results of this tendency, is opposed on 
two different grounds. In the first place, man's productive 
powers are held to be indefinitely extensible with the devel- 
opment of civilization. " With every increase in the ex- 
tent to which matter has taken upon itself the form of man, 
there should consequently be found an increase of his power 
to guide and direct the forces provided for his use . . . 
and constant increase in his power to command the food 
and clothing required for his support." 2 Secondly, the re- 

1 Note should be made of an additional piece of early material bear- 
ing on the subject of unemployment. The First Annual Report of the 
United States Commissioner of Labor (1886) on "Industrial Depres- 
sion " contains a recommendation for the restriction of immigration as 
a preventive of unemployment (pp. 271-3). 

2 H. C. Carey, Principles of Social Science (Philadelphia, 1858-9), vol. 
i, P- 89. 



I2 $] AMERICAN UNEMPLOYMENT THEORY 125 

productive power in man is not a constant quantity. There 
is a " self-supporting law of population " which " secures 
harmony in the growth of numbers and of food." Man's 
reproductive power ". . . diminishes as his various facul- 
ties are more and more stimulated into action — as employ- 
ments become diversified — as the societary action becomes 
more rapid — as land becomes divided — and as he himself 
becomes more free." * 

Another point made by Carey in his exposition of the 
essential harmonies of social life is that with the develop- 
ment of civilization the " continuity of societary motion " 
increases. The " unceasing waste of labor," which is one 
of the conditions of early society and a scattered people, is 
replaced, with the growth of wealth and population, by an 
equal distribution of employment throughout the year. 2 
This thesis, which is of extreme importance to the question 
of unemployment, is elaborated at some length. The "asso- 
ciation of mankind," a "diversity of employments," a vari- 
ety of commodities produced, a growing complexity in the 
life of man and in the combinations among men, a " rapid- 
ity of circulation," all these are essential to the promotion 
of that continuity in the motion of society which is held to 
be the supreme test of civilization. And Carey believed 
that these harmonies were being worked out, that the early 
" gambling character of the labor of the fields " and all the 
other discontinuities which characterize a low stage of de- 
velopment were disappearing. 3 

In his American Political Economy* Francis Bowen sets 

1 H. C. Carey, op. cit., vol. iii, p. 308. Cf. vol. iii, chs. 46 and 47, pp. 
263-327, for a full exposition of Carey's views on population. 

2 Ibid., vol. iii, p. 28. 

8 For a development of this interesting theory at length, cf. Principles 
of Social Science, vol. ii, ch. 20, pp. 17-42; vol. iii, ch. 38-44, pp. 17-232. 
* (New York, 1890.) 



j 2 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I2 6 

forth, in the main, the stock statements of the classical 
economists on the questions concerned with unemployment. 
Adam Smith's assertion that high wages compensate for 
irregularity of employment is repeated. 1 Senior's exposi- 
tion of the difficulty of the transfer of labor from one 
occupation to another, which is " the principal evil of a 
high state of civilization," is quoted. 2 As to the effects of 
the introduction of machinery, Bowen sides with Ricardo's 
critics in asserting that ordinarily the ultimate demand, be- 
cause of the resultant cheapened production, will be suffi- 
cient to cause the absorption of all who are temporarily 
thrown out of work. If the demand for a commodity be 
limited by natural causes, however, " any improvement 
which will diminish the labor required for its production 
must permanently deprive some laborers of employment." 3 
With Carey, Bowen repudiates the Malthusian theory of 
population. He sets forward " two great facts which 
afford a complete refutation of Malthusianism. The first 
is that the limit of population, in any country whatsoever, 
is not the number of people which the soil of that country 
alone will supply with food, but the number which the sur- 
face of the whole earth is capable of feeding; and it is a 
matter of demonstration that this limit cannot even be 
approached for many centuries." 4 The second fact is that 
" the practical or actual limit to the growth of population, 
in every case, is the limit to the increase and distribution, 
not of food, but of wealth." 5 And that the increase of 
population is attended by a more than proportionate in- 
crease of wealth is held, for " every human being is an 
implement for the production of wealth." 

1 American Political Economy (New York, 1890), pp. 192-3. 

2 Ibid., pp. 200-2. 3 Ibid., p. 54. 
4 Ibid., p. 140. 5 Ibid., p. 140. 



127] AMERICAN UNEMPLOYMENT THEORY i 2 j 

Francis A. Walker in his treatment of wages de- 
velops a theory bearing immediately upon the subject of 
unemployment. The essential immobility and lack of adap- 
tability of labor, factors which prevent perfect competition 
for the product of industry, are emphasized in both his 
chief works. 1 Not only is labor narrowly restricted geo- 
graphically, but there is a marked slowness of occupational 
change. Cairnes's theory of non-competing groups is en- 
dorsed, except in his contention that the children of the 
work classes constitute a "disposable funds." Walker con- 
cludes that ". . . until you secure mobility of adult labor 
you will fail to find it in the rising generation." 2 In his 
contention that mobility, adaptability and guidance of the 
rising generation are needed, Walker is anticipating later 
proposals for the remedying of industrial disorganization. 3 

3. METHODS OF PRACTICAL RELIEF 

The summarized discussion of the theories of the three 
classes of thinkers considered above is intended to give an 
idea of the course of theoretical reasoning in the United 
States on the question of unemployment. The review of 
methods of practical relief need not be lengthy. 

The treatment of the able-bodied unemployed during the 
latter part of the nineteenth century and the first decade of 
the twentieth ran about the same general course as did 
English practice. 4 For homeless men, municipalities and 
associated charities sometimes provided lodging-houses with 
attached woodyards or other plants for the enforcement of 

1 Francis A. Walker, Political Economy (N. Y., 1888) ; The Wages 
Question (N. Y., 1886). 

2 The Wages Question, p. 203. 

8 Cf. Political Economy, pp. 260-6 ; The Wages Question, " The Mo- 
bility of Labor," ch. 11, pp. 174-205. 
4 Cf. supra, pp. 22-31. 



I2 8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I2 8 

the supremely necessary " work test." * The Salvation 
Army and the Volunteers of America have established 
similar institutions in the large cities, in some cases with a 
work test, in many cases, it is alleged, without such a test. 2 
At times, when public attention had been sharply called to 
the question by a severe winter, an acute industrial depres- 
sion, or the gathering of " armies " of the unemployed in 
the urban centers, funds were raised by public or private 
action and temporary employment given. Such temporary 
works usually bore the same sort of doubtful fruit as similar 
English works had done. 3 Free employment bureaus con- 
ducted by philanthropic institutions, municipalities, and in 
some few instances by states, were established at various 
times and at various places for aiding the unemployed. The 
comparative lack of success of these earlier attempts was due 
to several causes, of which inefficiency, inadequate appropria- 
tions, lack of co-operation, and failure of all concerned to 

1 A fairly comprehensive description of the treatment of the able- 
bodied by charitable institutions is contained in Charles R. Henderson, 
Modern Methods of Charity (N. Y., 1904), especially pp. 395-6, 451-4, 
on vagrants. Cf. also Amos G. Warner, American Charities (N. Y., 
1908), pp. 244-262, much more modern in its treatment. E. T. Devine, 
Principles of Relief, to which reference has been made, contains mate- 
rial on this subject, cf. ch. iv, pp. 412-31, " Industrial Distress in New- 
York and Indianapolis, Winter of 1893-4." A similar discussion of 
winter relief is contained in the Annals of the American Academy of 
Political and Social Science, November 1894, PP- 61-81. Helena S. 
Dudley describes the relief work for women carried on in the Wells 
Memorial Institute at Boston. Descriptions of the more recent work 
of this character will be found in most of the current periodicals. 

2 Accounts of the work of the Salvation Army and of the Volunteers 
of America are given in: Monographs on American Social Economics, 
no. 20, " The Social Relief Work of the Salvation Army in the United 
States," by Commander Booth Tucker, 1900; Charles R. Henderson, 
Modern Methods of Charity (N. Y., 1904), pp. 433-38; United States 
Bureau of Labor, Bulletin No. 48 (September, 1903), "Farm Colonies 
of the Salvation Army." 

3 Cf. supra, pp. 25 et seq. 



I2 g] AMERICAN UNEMPLOYMENT THEORY I2 g 

realize their true function are outstanding. Reference will 
be had to them later. 1 Several farm colonies were created 
by voluntary agencies, and in 191 1 $10,000 was appro- 
priated in New York State for the establishment of an in- 
dustrial farm colony. But the public employment given 
was rare and brief; "Wayfarers Lodges" were compara- 
tively few, and patronized only in extremities of need by 
men out of work; the work of the early employment 
bureaus was virtually insignificant. The characteristic 
treatment has been to leave the men to their own devices, 
and to the police. 

The distinction between men temporarily out of work 
and the chronic idlers, which was urged by Mr. Chamber- 
lain in England in the Circular of 1886 and which was 
attempted under the Unemployed Workman Act, has not 
been made in practice in the United States. It is approxi- 
mately correct to say that until quite recently the blanket 
terms for the unemployed of this country have been 
" tramp " and " vagrant." And to a considerable extent 
is this still true of common parlance, for every migratory 
worker is a " tramp." It has been with the police, more 
than with any of the other agencies mentioned, that this 
class has had its dealings. The " need of co-operation with 
the police " in dealing with this class is emphasized by C. 
R. Henderson in Modern Methods of CJwrity. Tramp and 
vagrancy laws have applied practically indiscriminately to 
all who had " no visible means of support," workers and 
non-workers alike. A brief resume of these laws is there- 
fore pertinent to the present discussion. 

1 For descriptions of the earlier offices, cf. Monographs on American 
Social Economics, no. 6, W. F. Willoughby, " Employment Bureaus," 
(Boston, 1900) ; Massachusetts Bureau of Statistics of Labor, 34th 
Annual Report (Boston, March, 1904), pt. ii, pp. 131-213, Free Em- 
ployment Offices in the United States and Foreign Countries; United 
States Bureau of Labor, Bulletin No. 68 (Jan., 1907) ; J. E. Connor, 
Free Public Employment Offices in the United States. 



130 CONTEMPORARY THEORIES OF UNEMPLOYMENT [130 

4. TRAMP AND VAGRANCY LEGISLATION IN THE UNITED 

STATES * 

There are eighteen states 2 having tramp laws. In seven- 
teen of the states 3 the legislation covers persons begging 
from house to house and subsisting on charity; in nine* 
the laws apply to all persons " roaming about without vis- 
ible means of support " ; in five states 5 they apply to per- 
sons " wandering about without a fixed residence or lawful 
occupation " ; the laws of two states 6 include persons rid- 
ing on trains without permission; those of two states' 
cover persons not making reasonable efforts to secure em- 
ployment ; while the law of one state 8 applies to persons 
lodging in places other than lodging-houses. 

No minimum sentence is prescribed by the laws of eleven 
states; 9 it is three days under the law of one state; 10 
thirty days in three states; 11 six months in two states, 1 * 
and one year in one state. 13 

1 The material on tramp and vagrancy legislation included in this 
monograph has been obtained from charts compiled by W. C. Frank- 
hauser and Sidney D. Gamble, which constitute a digest of all such 
legislation prior to April 1, 1915. Acknowledgment of indebtedness 
to them is due. 

2 Maine, New Hampshire, Vermont, Massachusetts, Connecticut, 
Rhode Island, New York, New Jersey, Pennsylvania, Delaware, Mary- 
land, North Carolina, Alabama, Ohio, Mississippi, Nebraska, Iowa, In- 
diana. 

3 New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Is- 
land, New York, New Jersey, Pennsylvania, Maryland, North Caro- 
lina, Alabama, Ohio, Mississippi, Nebraska, Iowa, Indiana, Maine. 

4 Vermont, Massachusetts, Connecticut, Rhode Island, New York, 
New Jersey, Delaware, Maryland, Iowa. 

5 Maine, Pennsylvania, Delaware, Maryland, Mississippi. 
'Vermont, Massachusetts. 7 Nebraska, Iowa. 8 New York. 

9 New Hampshire, Vermont, Connecticut, New York, Pennsylvania, 
Delaware, North Carolina, Ohio, Mississippi, Iowa, Indiana. 
10 Nebraska. " Maine, New Jersey, Maryland. 

12 Massachusetts, Alabama. 13 Rhode Island. 



131] AMERICAN UNEMPLOYMENT THEORY 131 

A maximum sentence is not specified in one state ; * it is 
ten days in one state, 2 twenty days in one state, 8 thirty 
days in three states, 4 six months in three states, 5 ten months 
in one state, 6 one year in four states, 7 fifteen months in 
one state, 8 two years in one state, 9 and three years in two 
states. 10 

Thirteen states 11 set no fines; one state 12 prescribes a 
minimum fine of $3, while one 1S sets a minimum fine of 
$50. A maximum fine of $20 is set by the laws of one 
state, 14 of $50 by two states, 15 of $100 by one state, 16 and 
of $200 by one state. 17 

The place of commitment is not noted in the laws of two 
states. 18 In one state 19 commitment to the penitentiary at 
hard labor or to the state farm is provided for, while 
another 20 gives the alternative of the penitentiary or 
jail. One 21 prescribes the jail at hard labor, while two 22 

1 Indiana. 2 Iowa. 3 Nebraska. 

4 North Carolina, Delaware, Mississippi. 

5 Vermont, New York, New Jersey. 

6 Maine. 

7 Connecticut, Maryland, Pennsylvania, Alabama. 

8 New Hampshire. 9 Massachusetts. 

10 Rhode Island, Ohio. 

11 Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, 
New York, New Jersey, Pennsylvania, Delaware, Maryland, Ohio, 
Iowa, Indiana. 

12 Nebraska. 13 Alabama. 14 Nebraska. 

15 Mississippi, North Carolina. 

16 Vermont. 

17 Alabama. 

18 Nebraska, Indiana. 

19 New York. 

20 Ohio. 

21 Maine. 

22 Alabama, Iowa. 



I3 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [132 

set the jail or hard labor. Three x fix the jail, three 2 the 
workhouse, while one 3 sets either the workhouse or the 
jail. One state 4 provides for sentence to the house of cor- 
rection, no labor being specified, while another 5 sets the 
house of correction at hard labor. Another state 6 gives 
three alternatives, the house of correction, the state farm 
or the workhouse. The law of one state 7 provides for no 
commitment whatsoever, stating that tramps shall be set to 
work on the streets or hired out. 

On the matter of pay there is again variance. Fourteen 
of the eighteen states having tramp laws allot no pay for 
work done by such offenders when imprisoned. Of those 
providing that tramps set to work shall be remunerated, 
one 8 fixes 33 l /s cents a day, one 9 $1.00 per day, one 10 
$1.50 per day, while one ll prescribes that a " fair wage " 
shall be paid. 

This sketch of the character of tramp laws is virtually 
duplicated as regards the almost complete lack of uniform- 
ity, the varying severity, and the absence of discrimination, 
by a description of vagrancy laws. Up to April 1, 191 5, 
44 states 12 had definite vagrancy laws, those without such 
laws applying their tramp legislation to all classes of 

1 New Hampshire, North Carolina, Mississippi. 
* Connecticut, Rhode Island, New Jersey. 

5 Pennsylvania. * Maryland*. 5 Vermont. 

6 Massachusetts. 7 Delaware. 8 Vermont. 

9 Nebraska. 10 Iowa. n Delaware. 

12 New Hampshire, Massachusetts, Connecticut, Rhode Island, New 
York, New Jersey, Delaware, Maryland, North Carolina, Alabama, 
Ohio, Mississippi, Nebraska, Iowa, Virginia, West Virginia, South 
Carolina, Tennessee, Georgia, Florida, Kentucky, Michigan, Wisconsin, 
Indiana, Illinois, Louisiana, Arkansas, Texas, Oklahoma, Missouri, 
Kansas, Minnesota, North Dakota, South Dakota, Wyoming, Montana, 
Colorado, Utah, Nevada, Washington, California, Arizona, New Mex- 
ico, Idaho. 



133] AMERICAN UNEMPLOYMENT THEORY 133 

vagrants. The applicability of these laws to the unem- 
ployed, especially to those of the migratory type, is shown 
by the fact that in 37 states * they apply to " those who 
lack the means of support — who are able to work but re- 
fuse," in 17 states 2 to "persons lodging in places other 
than lodging-houses without permission," in 30 states 3 to 
" healthy beggars who solicit alms as a business," and in 
2 j states 4 to " suspicious persons strolling about without 
lawful business." While such definitions appear to exclude 
the legitimately unemployed, the fact that both the apparent, 
external line of cleavage and the actual line of cleavage 
between the vagrant, the tramp, and the industrial unem- 
ployed man cannot be clearly drawn has served to prevent 
such exclusion in actual practice. 

Sentences prescribed vary from a minimum of one day 
to six months, and from a maximum of ten days to three 
years, being sixty days or over in most of the states having 
such laws. Indeterminate sentences are provided for by 

1 Massachusetts, Connecticut, Rhode Island, New York, Maryland, 
North Carolina. Alabama, Ohio, Mississippi, Nebraska, Iowa, Virginia, 
South Carolina, Tennessee, Georgia, Florida, Kentucky, Michigan, Wis- 
consin, Indiana, Illinois, Louisiana, Arkansas, Texas, Oklahoma, Mis- 
souri, North Dakota, South Dakota, Wyoming, Montana, Colorado, 
Idaho, Nevada, Washington, California, Arizona, Utah. 

2 Massachusetts, Connecticut, Rhode Island, New York, Maryland, 
Iowa, Wisconsin, Illinois, Louisiana, North Dakota, Montana, Utah, 
Idaho, Nevada, Washington, California, Arizona. 

8 Connecticut, Rhode Island, New York, Maryland, North Carolina, 
Alabama, Ohio, Mississippi, Nebraska, Iowa, Virginia, South Carolina, 
Tennessee, Georgia, Florida, Michigan, Wisconsin, Indiana, Texas, 
Oklahoma, Minnesota, North Dakota, Montana, Colorado, Utah, Idaho, 
Nevada, Washington, California, Arizona. 

* Delaware, North Carolina, Alabama, Ohio, Nebraska, Virginia, 
South Carolina, Georgia, Florida, Kentucky, Michigan, Wisconsin, Illi- 
nois, Arkansas, Texas, Oklahoma, Missouri, Kansas, North Dakota, 
South Dakota, Montana, Colorado, Utah, Idaho, Nevada, California, 
Arizona. 



I3 4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [134 

the laws of two states. 1 The place and character of com- 
mitment vary, as they do under the tramp laws, between 
penitentiary, jail and workhouse. The laws of fourteen 
states 2 provide specifically for outdoor labor on the streets, 
in some cases in chain gangs. That of one state s allows 
two days' credit on the prison term for each day's work. 
As has been noted, New York has established a state farm, 
to which vagrants as well as tramps may be sent for inde- 
terminate periods. Of the fourteen state laws prescribing 
outdoor labor, nine 4 provide for payment for such labor, 
the amount varying from 75 cents per day to $2.00 per 
day. In two states 5 one-half of the proceeds of their 
labor is given to the men at outside work. 

In the foregoing summaries no attempt has been made 
to give a compendium of the various tramp and vagrancy 
laws, nor to note the specific laws of particular states. 
They are meant to show the general type of treatment to 
which the " workless man " was often exposed, and to in- 
dicate the general theories lying back of these laws. The 
legitimacy of the application of this type of legislation to 
the criminal tramp and the worst type of vagrant is not 
here questioned, though there is room for doubt as to 
their effectiveness even in this field. The significant point 
is that to the ordinary peace officer and petty judge, 
as to the ordinary person, the unemployed man, especially 
if a migratory worker of the type very common in the 

1 New York, Georgia 

1 Georgia, Illinois, Arkansas, North Dakota, Colorado, Nevada, Cali- 
fornia, Arizona, New Mexico, Ohio, Kentucky, Wyoming, Iowa, Wash- 
ington. 

s Nevada. 

4 Ohio, Kentucky, Arkansas, Wyoming, Illinois, Colorado, California, 
Iowa, Washington. 

5 Iowa, Washington. 



135] AMERICAN UNEMPLOYMENT THEORY 135 

United States, has been a tramp or a vagrant. Dis- 
crimination was, and to a great extent still is, lacking in 
the treatment of these two classes. Laws such as that of 
Rhode Island, allowing $5.00 per conviction to peace offi- 
cers arresting tramps, intensify the evil effects of such lack 
of discrimination by putting premiums upon the arrest of 
homeless men. The "floating' ' policy, the forced moving-on 
of all non-residents, which has been characteristic of an- 
other type of police solution of the problem of the migra- 
tory man is in strict accord with, and is in fact an out- 
growth of, the theories inherent in this law making. 

This tramp and vagrancy legislation, this police control, 
has constituted perhaps a major part of the field of practice 
in the treatment of the unemployed. The above discussion 
of it, as a counterpart to the development of the types of 
theoretical reasoning touched upon, will help to show what 
has been the groundwork of the modern American theories 
concerned with unemployment and the unemployed man. 

Brief reference has been made to the earlier attempts to 
establish public employment bureaus in the United States. 1 
Later developments, notably in regard to action by the 
various states, have been far more promising, not only in 
that laws providing for such bureaus have been enacted, 
but in the comprehensive character of the employment-office 
systems thus established in certain of the states. At the 
present time 2 twenty-four states have laws providing for 
the organization of the labor market by means of central- 
ized state employment-agency systems. 3 In addition, one 

1 Supra, p. 128. 

2 April 1917. 

'The states having such laws, with the years of their enactment, are 
as follows: Arkansas, 1917; California, 1915; Colorado, 1907; Connec- 
ticut, 1005; Illinois, 1915; Indiana, 1909; Iowa, 1915; Kansas, 1901 ; 
Kentucky, 1906; Maryland, 1916; Massachusetts, 1906; Michigan, 1905; 



I3 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [136 

state * authorizes municipalities to set up public bureaus, 
another 2 encourages municipalities to take such action, 
and a third 3 requires them to do so. In the sphere of fed- 
eral action the attempt of the Division of Information of 
the United States Bureau of Immigration to provide ma- 
chinery for the same purpose is promising. This subject 
is briefly discussed below in connection with the immigra- 
tion question. 4 

While these state systems are as yet inadequate, and 
although uniformity and full interstate co-operation have 
not as yet been achieved, the spread of the movement 
toward a more efficient distribution of labor marks the 
coming of a truer conception of the nature of the problem 
of unemployment. 

We have considered types of the men of one idea who 
attempted to solve the problem of unemployment. That 
anything of value to a solution of the problem was con- 
tributed by them is doubtful, though the force of Henry 
George's thought is not yet spent. Wyckoff and Flynt, in- 
vestigators of reality, gave American society that closer 
and more intimate view of the " submerged tenth " which 
Charles Booth had given contemporary England. The 
charity administrators, the individual with all his faults 
bulking large in their view, tended to overlook the 

Minnesota, 1905; Missouri, 1809; Nebraska, 1897; New Jersey, 1915; 
New York, 1914; Ohio, 1890; Oklahoma, 1908; Pennsylvania, 1915; 
Rhode Island, 1908; South Dakota, 1913; West Virginia, 1901 ; Wis- 
consin, 1901. Thanks are due to Dr. John B. Andrews, secretary of the 
American Association for Labor Legislation, for the list of these laws. 

1 Montana. 

2 Louisiana. 

3 Idaho. 

4 Cf. infra, pp. 155, 156. Cf. also John R. Commons and John B. An- 
drews, Principles of Labor Legislation, "Federal Activity" (N. Y., 
1916), pp. 276-8, 



137] AMERICAN UNEMPLOYMENT THEORY 137 

dominant industrial factors. Yet value their work has had, 
and the modern program for the prevention of unemploy- 
ment contains measures recommended years ago by men 
with this training. Similarly, though the American econo- 
mists did not isolate for separate study the problem being 
reviewed, and do not, of course, give us a complete analysis 
of the question as it is presented today, certain of the con- 
clusions they reached appear on that same program. From 
charity practice, public and voluntary, something has been 
learned. The place of police power in the treatment of the 
unemployed, the possibilities of repressive legislation, have 
been indicated by the outcome of such legislation. But a 
synthesis of methods and a concentration of attention on 
the specific problem of unemployment were needed for a 
more perfect analysis. A beginning in that study has been 
made. 



CHAPTER IV 

Contemporary American Theories of Unemployment 
and of Unemployment Relief 

i. general statement 

As a whole, the contributions made by American stu- 
dents to the study of unemployment lack the concreteness, 
the fullness, and the general applicability characteristic of 
four or five of the standard English works. There is no 
standard American work. There is no one authority con- 
taining a general description of conditions in the country 
as a whole, an analysis of such statistics and other infor- 
mation as we have, a full treatment of causes, a description 
of remedies and their applicability to the United States, 
and an outline of the all-important administrative ma- 
chinery needed. 1 There are governmental commission 
reports touching the subject of unemployment. There 
are local reports by various state and city commissions, re- 
stricted in scope and with but a limited circulation. There 
are fragmentary statistics, 2 published by federal and state 
bodies and by a few other groups, partially summarized by 
occasional individuals. Popular magazine articles and edi- 
torials innumerable have appeared within the last five years. 
The iniquities of the private employment-agency system 
and the necessity for public offices have been themes for a 

1 A notable contribution in this last field is made in John R. 
Commons and John B. Andrews, Principles of Labor Legislation (N. 
Y., 1916), ch. ix, "Administration." 

2 A note concerning American unemployment statistics is made at 
the end of this monograph. 

138 [138 



139] COXTEMPORARY AMERICAX THEORIES 139 

mass of writing. Other literature there has been on the 
tramp, the vagrant and the migratory worker, most of it 
characterized by a failure to link up these elements with 
the main problem. Industrial education, vocational train- 
ing and occupational guidance have received varying 
amounts of space, in some cases as phases of the unemploy- 
ment problem, more often as separate subjects. Land 
monopoly and immigration have been featured as causes of 
unemployment. Conventions have been held, and various 
of the more serious journals have given space to fairly 
comprehensive discussions of the problem. Finally, there 
has been propaganda designed to stimulate effective reme- 
dial work along correct lines. But. except in a very limited 
degree and in condensed form in certain of the reports, 
books, periodical articles and propaganda literature, there 
has been no synthesis of the subject, no full consideration 
by any one authority- of the causes, conditions and possible 
remedies for unemployment as it faces the people of the 
United States today. 

To review in detail the various theories as to the causes 
of unemployment and the remedies for unemployment 
which appear in this variegated literature would constitute 
in large part a mere repetition of the first part of this paper 
which traced the various opinions held by English writers. 
The repetition would be not only one of form, but largely 
one of fact also. The analysis of the problem which has 
been sketched above has, in all its essentials, been accepted 
by American students of unemployment. 1 Additional fac- 

1 The first comprehensive account of the problem of unemployment 
to appear in the United States was the Report to the Legislature of the 
State of Xew York by the Commission Appointed . . . to inquire into 
the Matter of Employers' Liability and Other Matters, Third Report, 
Unemployment and Lack of Farm Labor (Albany, 1911). This report, 
largely the work of William M. Leiserson, appeared two years after 
the first edition of Wm. H. Beveridge's classic, Unemployment — A 



I4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I4 o 

tors there are which enter into the situation as the United 
States faces it, and original work along certain lines has 
been and is being done in this country. But in its broad 
outlines the problem is the same and the analysis of it is 
the same. 

The study of the problem made by William M. Leiserson 
corresponds closely to the approach outlined in the first 
part of this paper. His first, and what is to date his full- 
est exposition of the question appears in the Report on Un- 
employment and Lack of Farm Labor, published in 191 1 
by the New York Commission on Employers' Liability. 
Though the investigation was confined to New York State 
the findings have a wider bearing. The proposed remedies, 
being recommendations for immediate legislation, are nec- 
essarily more restricted than more general suggestions 
would be. They include a system of public employment 
offices, the publication of a labor-market bulletin, the occu- 
pational direction of juveniles, and the manipulation of 
public work so as to regularize employment opportunities. 1 
His latest contribution, an article on " The Problem of 
Unemployment Today," 2 though briefer, is wider in its 
scope and contains the results of more recent work. He con- 
tends that unemployment is not an insoluble problem, that 

Problem of Industry, and follows closely the lines laid down by Bev- 
eridge. 

(Note should be made of the treatment of the problem by the 
United States Industrial Commission, Final Report, 1902, pp. 746-63- 
Most of the factors at present held to account for unemployment are 
enumerated, but the omission of several of those fundamental in the 
analysis, and the failure to present the case with the logical clearness 
characterizing Leiserson's presentation of the situation in New York 
justify the statement that the latter was the first American analysis 
along acceptedly sound lines.) 

1 N. Y. Commission on Employers' Liability, etc., Report on Unem- 
ployment and Lack of Farm Labor, pp. 65-9. 

2 Political Science Quarterly, March 1916 (vol. 31, no. 1), pp. 1-24. 



I4 i] CONTEMPORARY AMERICAN THEORIES 141 

it is a result of maladjustment, that it is not personal but 
economic, that there is no over-population, no absolute 
surplus of labor, but a fluctuating industrial reserve force 
which is " only relatively superfluous." It follows from 
this that labor-saving machinery and improved processes 
cannot create a surplus labor force ; they merely make more 
difficult the problem of adjusting supply to demand. The 
unemployed man is therefore " an industrial factor, not a 
parasite upon industry." ". . . . to adjust these fluctua- 
tions, to distribute labor more evenly over the country, and 
in better proportions among the occupations, to equalize 
the amount of work among the seasons and the years," 
" to secure a more perfect adjustment of particular forms 
of labor to specific demands " — this is " the essence of the 
problem." * These ends are to be achieved by "a con- 
nected network of public employment bureaus," by guiding 
the entrance of children and immigrants into the labor 
market, through regularizing the labor demand by shifting 
necessary public work to periods of depression, by a de- 
casualization process, through " positive efforts of employ- 
ers to regularize employment," and by means of insurance 
against the " inevitable unemployment risk." 2 

The United States Industrial Commission in its Final 
Report, printed in 1902, 3 gives an analysis approximating 
present-day conclusions more closely than do other writings 
of that, date. Personal, climatic and industrial causes are 
specified; immigration* is named as a cause contributing 
to the seasonal concentration of employment; "the work- 

1 Political Science Quarterly, op. cit., pp. 14-21. 
3 Ibid., pp. 16-20. 

3 United States Industrial Commission, Final Report (vol. 19 of the 
Commission's Reports) (Washington, 1902), pp. 746-763. 

4 Cf. infra, pp. 146-156, for a treatment of the relation of immigra- 
tion to unemployment. 



I4 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [142 

man's ignorance of the labor market " is considered to be 
an important element in the situation. The remedying of 
this latter condition by the development of the labor-agency 
system is the only specific recommendation made on this 
subject. 1 

The most pretentious of the publications of individuals 
on the question is Frances A. Kellor's Out of Work — A 
Study of Unemployment. 2 A revision of an earlier work 3 
concerned primarily with the evils of the private employ- 
ment agency system, the later book is designed to describe 
the present unemployment situation and the remedial meas- 
ures which have been undertaken or proposed. A broad 
field is covered, and a considerable body of information 
concerning conditions, attempted remedies, and the details 
of various programs for the future is set forth without a 
marked degree of organization. A great part of the book 
is devoted to a discussion of the organization of the labor 
market. The diagnosis by Miss Kellor is virtually that of 
the English students and need not be detailed. The book 
is referred to later in connection with the treatment of sev- 
eral peculiarly American problems. 

Approaching the subject from the field of insurance I. 
M. Rubinow analyzes the problem in the same way, em- 
phasizing the same general factors. 4 As to a solution, 
Rubinow believes that the only remedy is to be found 
through an averaging of wages, and that this can only be 
done by means of " compulsory, subsidized unemployment 



1 United States Industrial Commission, Final Report, pp. 757-61. 

2 (New York, 1915.) 

3 F. A. Kellor, Out of Work (New York, 1905). 

4 I. M. Rubinow, Social Insurance (New York, 1913), ch. 26, "The 
Problem of Unemployment," pp. 441-455. 

5 Ibid., pp. 455-79. Rubinow's discussion of unemployment-insurance 
systems is a valuable addition to the material on that subject 



143] CONTEMPORARY AMERICAN THEORIES 143 

Isaac A. Hourwich x points to the same causes of sea- 
sonal and cyclical variations, absence of mobility, and the 
building-up of labor reserves. The contention that unem- 
polyment is the result of over-population is classed by Hour- 
wich as fallacious. 

The United States Commission on Industrial Relations 2 
gives " two basic causes of unemployment — unjust distri- 
bution of income and land monopolization," and additional 
minor causes corresponding to those which have been 
named. The former causes are mentioned above. 3 Em- 
phasis has been placed throughout by Leiserson and 
others of the Commission staff who worked on unemploy- 
ment, upon the necessity of organizing the labor market, 4 
which, as we have seen, is Beveridge's key to the solution 
of the problem. 

To detail the findings of other bodies as to the general 
causes of unemployment and the general methods of relief 
would entail mere repetition. The Report of the Chicago 
Municipal Markets Commission? the Report of the Mayor's 
Commission on Unemployment (Chicago), 6 the report to 

1 Isaac A. Hourwich, Immigration and Labor (N. Y., 1912), pp. 114- 
125. 

2 United States Commission on Industrial Relations, Final Report 
(Washington, 1915), pp. 33~38, 156-182, 255-275. 

3 Pp. 119, 120. 

4 United States Commission on Industrial Relations, Final Report, 
pp. 170-182. Cf. also: United States Commission on Industrial Rela- 
tions, Tentative Proposals for Consideration on the Question of Public 
and Private Employment Offices (Washington, 1914) ; United States 
Commission on Industrial Relations, First Annual Report (Washing- 
ton, 1914), pp. 55-57- 

5 Report to the Mayor and the Aldermen by the Chicago Municipal 
Markets Commission on A Practical Plan for Relieving Destitution 
and Unemployment in the City of Chicago (Chicago, 1914). 

6 (Chicago, 1914.) 



I4 4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [144 

the Commonwealth Club of California on Unemployment,' 1 
the Report on Unemployment by the Commission of Im- 
migration and Housing of California, 2 the Forty-sixth An- 
nual Report on the Statistics of Labor of Massachusetts 3 
fix the same broad causes, with certain additional points of 
emphasis to be noted later, and propose the same basic 
methods of relief. Henry R. Seager, 4 Edward T. Devine, 
in his later works, 5 John R. Commons, 6 Charles R. Hen- 
derson 7 agree on the essentials of the same analysis. 
Scott Nearing 8 and Jacob Hollander 9 have voiced the 
cry that remedial maladjustment is the cause of unemploy- 
ment. Alice Solenberger, 10 in her study of homeless wan- 
derers, sensed the basic industrial fault lying at the root of 
the human problem she tried to solve. 

Notable, also, have been the series of articles appearing 
in the Annals of the American Academy of Political and 

1 Transactions of the Commonwealth Club of California (vol. 9, no. 
13), Unemployment (San Francisco, 1914). 

2 Commission of Immigration and Housing of California, Report on 
Unemployment (Supplement to First Annual Report) (Sacramento, 
1914). 

s (Boston, 1915), pt. ii, pp. 24-31. 

4 Henry R. Seager, Social Insurance (New York, 1910), pp. 84-114. 
Cf. also Seager's letter to Devine in Report on the Desirability of 
Establishing an Employment Bureau in the City of New York (New- 
York, 1909), pp. 86-89. 

5 Misery and its Causes (New York, 1913), pp. n-14, 115-146; Report 
on the Desirability of Establishing an Employment Bureau in the City 
of New York. 

6 Labor and Administration (New York, 1913), pp. 358-381. 

7 Report of the Mayor's Commission on Unemployment (Chicago, 
1914). Cf. also "The Struggle Against Unemployment," American 
Labor Legislation Review, May 1914 (vol. iv, no. 2), pp. 294-299. 

8 Social Adjustment (New York, 1911), pp. 266-284; Social Religion 
(New York, 1913), PP- 124-137, 211. 

9 The Abolition of Poverty (New York, 1914). 

10 One Thousand Homeless Men (New York, 1911). 



*45l CONTEMPORARY AMERICAN THEORIES 145 

Social Science. Various of their issues * have dealt with 
phases of the unemployment problem, and material of ex- 
ceptional value on the subject has been contributed. Out- 
standing in the contemporary field of practical work toward 
a solution of the pressing question of unemployment have 
been the American Association for Labor Legislation and 
its subsidiary body, the American Section of the Inter- 
national Association on Unemployment. Under the aus- 
pices of these organizations two national conferences on 
unemployment have been held, intensive investigations 
prosecuted, a national survey of methods of unemployment 
relief conducted, and propaganda looking toward an intel- 
ligent meeting of the problem carried on. 2 The character 
of the relief measures detailed in their propaganda litera- 
ture — the establishment of public employment exchanges 
b>y means of which entrants to industry may be guided, 
seasonal industries dovetailed, and casual labor decasual- 
ized; the systematic distribution of public work; the reg- 
ularization of industry by employers, workers and con- 
sumers ; unemployment insurance — indicate how closely the 
analysis of unemployment made by these bodies corres- 
ponds to that outlined in the first part of this monograph. 

Apart, however, from the main factors in the situation, 
which are considered to be universally the same, there are 

1 Cf. especially: vol. 33, no. I, January 1909, " Industrial Education"; 
vol. 33, no. 2, March 1909, " Labor and Wages " ; vol. 59, May 1915, 
"The American Industrial Opportunity," pp. 104-21 1; vol. 61, Septem- 
ber 19 1 5, "America's Interests after the European War." 

2 The " Proceedings of the First National Conference on Unemploy- 
ment " appear in The American Labor Legislation Review, May 1914 

(vol. iv, no. 2). The "Proceedings of the Second National Confer- 
ence on Unemployment," together with reports of investigators, are in 
The American Labor Legislation Review, June 1915 (vot. v, no. 2). 
The " Unemployment Survey " is in The American Labor Legislation 
Review, November 1915 (vol. v, no. 3). 



I4 6 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I4 6 

certain conditions peculiar to the American problem of un- 
employment. Two of these, the problem of immigration 
and that of the migratory element, are important factors 
in the situation in the United States. The outstanding fea- 
tures of each of these problems in their relation to unem- 
ployment will be briefly considered. 

2. THE RELATION OF IMMIGRATION TO UNEMPLOYMENT 

The flood of immigration to the United States has been 
increasing annually in volume beyond all precedents of 
similar population movements in the world's history. Dur- 
ing the year ending June 30th, 1914, 1 1,218,480 immigrant 
aliens were admitted to the United States. During the 
twenty-year period from 1895 to 1914, 14,750,738 immi- 
grants came to this country. Previous to the year 1896 the 
proportion of immigrants coming from northern and west- 
ern Europe far exceeded that from southern and eastern 
Europe. The tide changed in that year, the number of 
Italians, Poles, Hebrews, Greeks, Russians and others of 
the latter group swelling enormously with each passing 
year. During the decade from 1901 to 191 o, 21.8% of the 
total number of immigrants were from northern and west- 
ern Europe, while 71.9% came from southern and eastern 
Europe. The character of the recent immigrants is indi- 
cated also by the occupational division. Of the 1,214,480 
immigrants for the year ending June 30th, 19 14, 14,601 
were of the professional class, 173,208 of the skilled classes, 
320,215 professed no occupation, while 658,869 were vir- 

1 Since the beginning of the European War, immigration has, of 
course, fallen far below this figure. What the course of future immi- 
gration will be is an unsettled question. The statistical data are from 
the reports of the Commissioner General of Immigration and from the 
Statistical 'Review of Immigration compiled by the United States Im- 
migration Commission (vol. iii of that Commission's Reports). 



I47 ] CONTEMPORARY AMERICAN THEORIES 147 

tually unskilled, though a considerable part of these are 
classed as farm laborers. 1 

This influx has given rise to many new problems, and to 
the intensification of many old ones. Its effect on the labor 
market is apparently so obvious that for years it has been 
maintained by many persons that immigration is the basic 
cause of unemployment. That it is at least an important 
contributing factor is the opinion of the United States Im- 
migration Commission, an opinion submitted on the basis 
of a most comprehensive survey of the general question of 
immigration. " Their (the recent immigrant population) 
numbers are so great," concludes the Commission, " and 
the influx is so continuous that even with the remarkable 
expansion of industry during the past few years there has 
been created an over-supply of unskilled labor, and in some 
of the industries this is reflected in a curtailed number of 
working days, and a consequent yearly income among the 
unskilled workers which is very much less than is indicated 
by the daily wage rates paid." 2 This " over-supply of un- 
skilled labor in the industries of the country as a whole" 
is held to be " a condition which demands legislation re- 
stricting the further admission of such unskilled labor." 
The same conclusion is reached by the Commission's inves- 
tigators of immigrants in industries. 3 " The entrance into 
the operating forces of American industries of . . . large 
numbers of wage-earners of the races of Southern and 
Eastern Europe . . . has led to the voluntary or involun- 
tary displacement from certain occupations and industries 
of the native American and older immigrant employees." * 

1 An additional 51,587 are put in a miscellaneous group. 

2 United States Immigration Commission, Reports (Washington, 
1911), vol. i, p. 39- 

3 W. Jett Lauck was the expert in charge of these field investigations, 
and the conclusions represent his findings, in part. 

4 United States Immigration Commission, Reports, vol. i, pp. 500-1. 



I4 8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [ I4 8 

The restrictive measures suggested by the Commission 
are seven in number, the three most important being " the 
exclusion of those unable to read or write in some lan- 
guage," " the limitation of the number of each arriving 
each year to a certain percentage of the average of that 
arriving during a given period of years," and " the exclu- 
sion of unskilled laborers unaccompanied by wives or fami- 
lies." x 

An earlier government investigational commission, the 
United States Industrial Commission, formed a similar 
opinion. ". . . the general conclusion is inevitable that 
while a moderate flow of immigration may be assimilated 
without depressing effects, a rapid influx of immigrants 
with low standards of living, crowding into the cities and 
into the less skilled occupations, creates an unfair compe- 
tition with those already here, intensifies the effects of other 
depressing causes, and weakens the organization of the 
working people, by which they hope materially to improve 
their earnings." 2 In still another phase of the unemploy- 
ment situation, the Commission contends, does immigration 
serve to accentuate the problem. The evil of excessive 
seasonal concentration of production in a short, busy season 
is held to be made possible by " the over-supply of un- 
organized labor and the necessity under which the em- 
ployees exist of working more hours when they find em- 
ployment in order to compensate for the period of idleness." 
" It is mainly the presence of a large supply of immigrant 
workpeople and their willingness to work more hours that 
make it possible to concentrate production " in the trades 
marked by that practice. 3 

1 United States Immigration Commission, Reports, vol. i, p. 47. 

2 United States Industrial Commission, Final Report (vol. 19 of com- 
plete report, Washington, 1902), p. 969. 

•Ibid., p. 751. 



149] CONTEMPORARY AMERICAN THEORIES 149 

" Agriculturalizing the immigrant " is not looked upon 
by the Industrial Commission as a final solution of the 
problem, though of value when combined with other meas- 
ures. 1 Various restrictive measures designed to raise the bars 
higher and so keep out some of the surplus are suggested. 2 

Jeremiah Jenks and W. Jett Lauck 3 favor a like restric- 
tive program. Though this policy is based upon other 
reasons than a belief in a superfluity of labor, it is to be 
noted that among their conclusions it is stated that "the 
point of complete saturation has already been reached in 
the employment of recent immigrants in mining and manu- 
facturing establishments. " 4 The authors are very definitely 
in favor of restriction, holding such a policy to be a neces- 
sary first step toward ameliorating the present conditions 
of industrial affairs, under which " not only the economic 
welfare of the American wage-earner but the maintenance 
of our political and social institutions are threatened." 5 

The American Federation of Labor has consistently ad- 
vocated restriction of immigration, basing its attitude in 
part on the point being considered here — that immigration 
is a direct cause of unemployment. Its policy is expressed 
in a statement submitted to the United States Immigration 
Commission 6 by Samuel Gompers, president of the Fed- 
eration. One of the exhibits in the statement, an article by 
John Mitchell, states " That there is an inseparable relation 
between unemployment and immigration is demonstrated 
by all the statistics which are available upon the subject." 7 

1 United States Industrial Commission, op. cit., pp. 971-977. 

2 Ibid., pp. 995-1014. 

3 The Immigration Problem (New York, 1913). 
* Ibid., p. 210. 

5 Ibid., p. 213. 

6 United States Immigration Commission, Reports, vol. 41, pp. 369-431. 
T Ibid., p. 374. That the " glutting of the labor market through im- 



I5 CONTEMPORARY THEORIES OF UNEMPLOYMENT [150 

The opinion that immigration is a cause of unemploy- 
ment, and that therefore restriction is necessary, is quite 
commonly held. The New York Commission on Employ- 
ers' Liability reports : " The large and continuous additions 
to the laboring population of the State due to immigration 
are among the most important single causes of unemploy- 
ment. Immigration, no doubt, accounts in part for the 
chronic over-supply of labor revealed by the statistical evi- 
dence we have presented." l Prescott F. Hall similarly 
holds that " The displacement of large numbers of native 
workers by foreigners who underbid them affects the stand- 
ard of living, not only by direct competition but by increas- 
ing the ranks of the unemployed." 2 

They who contend that immigration is a cause of un- 
employment do not hold the field alone, however. Isaac A. 
Hourwich is the staunchest defender of the view that the 
solution of unemployment is to be found by reforming 
other conditions, not by checking the incoming alien. Hour- 
wich first develops the orthodox explanation of unemploy- 

migration " is merely temporary and that the consequent over-supply 
of labor in the large cities is temporary, is asserted by Mitchell in an 
earlier publication. The evils of even this temporary glut are strongly 
emphasized, however. Organised Labor (Philadelphia, 1903), p. 182. 

John R. Commons, Races and Immigrants in America (New York, 
1911), pp. 115-116, quotes some interesting resolutions adopted by the 
General Executive Board of the United Garment Workers of America, 
which consists with one exception of Russian Jews. The resolutions 
allege that the labor market has been overstocked so that the workers 
of this country are seriously menaced. Congress is called upon to 
completely suspend immigration for a term of years, and other drastic 
measures are urged. 

1 Report to the Legislature of the State of New York by the Com- 
mission appointed to Inquire into the Question of Employers' Liability 
and Other Matters, Third Report, Unemployment and Lack of Farm 
Labor (Albany, 1911), pp. 7-8. 

2 Immigration (New York, 1913), p. 135. 



1 5 1 ] CONTEMPORARY AMERICAN THEORIES 1 5 t. 

ment, accounting for the glutting- of the labor market by 
Beveridge's " labor reserve " argument. 1 He next pro- 
ceeds to refute the argument that this " normal glutting " 
might be aggravated by immigration. If underbidding by 
the cheaper alien forces the native out of work, the per- 
centage of unemployment should be higher among the 
natives in the industries in which they both work, alleges 
Hourwich. Statistics from the Report of the United States 
Immigration Commission are quoted to disprove this argu- 
ment. 2 Furthermore, the ratio of unemployment is least 
in the states having the largest proportion of immigrant 
wage-earners, greatest in those where the proportion of im- 
migrants is lowest. Immigration and unemployment statis- 
tics are next compared over a period of years, Hourwich at- 
tempting to show by these figures that with increasing immi- 
gration unemployment decreases, and with declining immi- 
gration unemployment increases. 3 This is explained by the 
fact that " unemployment and immigration are the effects 
of economic forces working in opposite directions; that 
which produces business expansion reduces unemployment 
and attracts immigration, that which produces business de- 
pression increases unemployment and reduces immigra- 
tion." 4 It is merely a case of economic supply and de- 
mand, says Hourwich in another article; 5 there may be 
fluctuations, but in the long run the supply of immigrants 
will adjust itself to the demand. Holding it as proved that 
unemployment is not the result of over-population, Hour- 
wich contends that it necessarily follows that " the limita- 

1 Immigration and Labor (New York, 1912), pp. 114-125. 

2 Ibid., pp. 126-128. 
1 Ibid., pp. 137-139. 
'Ibid., p. 145. 

5 Political Science Quarterly, December 191 1, "The Economic As- 
pects of Immigration" (vol. xxvi, no. 4), pp. 615-42. 



I5 2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [152 

tion of the number of wage-earners can promise no relief 
against unemployment. " x 

Not quite so emphatic in their arguments are others who 
do not admit immigration as a cause of unemployment. 
Helen L. Sumner, holding that ". . . these cycles (of pros- 
perity and depression) have a greater influence than can be 
attributed to the competition of alien labor," 2 considers 
the case against immigration to be unproved. Frances Kel- 
ler takes the same attitude. ". . . we do not know whether 
our reserve of immigrant labor is larger than the country 
should carry or not." 3 

The most recent statement of the " present-day analysis 
of unemployment " is that of Leiserson. 4 It is held here to 
be definitely established that there is "no absolute overplus 
of labor," that, though ports of entry for immigrants and 
certain occupations may be over-supplied with labor, there 
are always other parts of the country and other occupations 
capable of using more labor than they have. Leiserson, 
therefore, sides with those who look beyond immigration 
for the fundamental causes of unemployment. 5 

1 Immigration and Labor, p. 146. 

2 Adams and Sumner, Labor Problems (New York, 1905), p. 87. 

3 Out of Work, p. 147. 

4 Political Science Quarterly, March 1916, " The Problem of Unem- 
ployment Today," vol. xxxi, no. 1, pp. 1-24. 

5 Ibid., pp. 12-14. 

The Surplus Labor Theory of Unemployment 
Mention of the theory that unemployment is due to a real surplus of 
labor has been made at various points in the preceding analysis. It 
was not taken up at length because virtually discarded by the leading 
English students. A brief statement of the development and present 
status of the theory in England is relevant at this point, however, for 
it has a bearing upon the question of the relation of immigration to 
unemployment. 

Malthusianism was in its essence a theory that over-population was 
the cause of destitution. (Cf. supra, pp. 15 et seq.) The tendency of 



153] CONTEMPORARY AMERICAN THEORIES 153 

One other phase of the immigration question, in its re- 
lation to unemployment, should be noted. The necessity of 
the distribution of immigrants upon their arrival, of their 

population to increase faster than the power of production was believed 
to be the cause of unemployment, pauperism, and all the accompanying 
misery. How Ricardo completely reversed this theory that the power 
of production was outstripped by population, in contending that a sur- 
plus of labor might result from increased power of production, is aptly 
pointed out by William M. Leiserson (in the above-mentioned article, 
pp. 7-8). For Ricardo claimed that the introduction of machinery and 
improved processes resulted in the permanent displacement of labor. 
(Cf. supra, pp. 17 et seq.) "Thus," says Leiserson, "the doctrine that 
labor is superfluous because population grows faster than production 
becomes a doctrine that increased productive power creates a surplus 
of labor." 

The same theory of a superfluity of labor is inherent in poor-law 
procedure prior to 1834. The practice of community support of the 
able-bodied out of the rates was based largely upon the belief that 
such a surplus existed. {Cf. Report of Royal Commission on the Poor 
Laws, 1909, pt. vi, ch. 9, sec. 442.) The Royal Commission of 1834, as 
has been noted above (pp. 26 et seq.), repudiated this theory, and based 
their recommendations upon the doctrine of personal responsibility for 
unemployment. 

The idea that there are more workers than work did not die, how- 
ever. It has appeared constantly in popular discussion, and has 
been voiced at various times by students of the problem. The London 
County Council expressed it in a rather tentative form in 1903. " If it 
is a fact that there does not exist sufficient work in the country to 
afford employment for the whole population, that circumstance alone 
appears to warrant a consideration as to whether the reduction of the 
hours of labor to a reasonable limit, in the interests of industry and 
labor alike, is not a matter of the highest importance." (Quoted, 
Brassey-Chapman, Work and Wages, London, 1908, vol. ii, Wages and 
Employment, p. 352.) The Webbs speak of the "surplus of labor 
power which already exists in the partial idleness of huge reserves of 
under-employed men" (Minority Report, pt. ii, p. 268), and state that 
". . . there exists in the United Kingdom today no inconsiderable sur- 
plus of labor." They qualify their assertions, however, by admitting 
that this is not a surplus made up of workmen who could not, with an 
improved organization of industry, be productively employed. The 
surplus of which they are seeking to dispose is not a real superfluity 
of labor, therefore. 

The most emphatic statement that there is a real surplus is made by 



I5 4 CONTEMPORARY THEORIES OF UNEMPLOYMENT [154 

industrial and regional guidance, is emphasized by those 
who argue for increased restriction. The congestion of 
immigrants in certain occupations and in certain cities is 

Norman B. Dearie {Industrial Training, London, 1914). His theory 
of a " Defective Demand " {i. e. one not sufficient to engross the total 
supply of labor) has been referred to {supra, p. 50). It is true, he 
says, that ". . . under existing methods of employment the whole supply 
is required for some purpose or other. But there is more than enough 
of it (labor) to permit the free use of the more irregular and wasteful 
methods of employment, and to provide for the growth of large re- 
serves of labor, both of men and boys" (p. 437). Were it not for this 
superfluity of labor, Dearie contends, the present vicious waste of juve- 
nile and adult labor in faulty methods of industrial training, "blind 
alleys," and in unnecessarily large labor reserves, could never go on. 
That they exist is proof of the existence of a surplus (pp. 436-452). 

Arguments contradictory to this theory of an excessive number of 
workers are advanced by most of the writers on unemployment. Thus, 
Herbert Samuel, in denying the theory that England is over-populated, 
stated: ". . . . those who hold this view forget that, other factors 
being constant, the development of a country's natural resources and 
its foreign trade increases with the growth of its population and 
diminishes with its fall, that a small population may mean a smaller 
production and not a greater regularity of employment, and, conversely, 
that an increase of population may not involve an addition to the ranks 
of the unemployed." (Reservation of Herbert Samuel in the Report 
of Agricultural Settlements in British Colonies, igo6, p. 24. Quoted by 
Stanley C. Johnson, A History of Emigration from the United King- 
dom to North America, 1763-1912, London, 1913, pp. 304-5.) Rowntree 
and Lasker assert that ". . . it is clear that the absorption of a perma- 
nent surplus of efficient, even though unskilled labor cannot be an in- 
soluble problem unless there is a shortage of one or both the other two 
factors in the production of wealth, viz., land and capital. As there is 
no such shortage in England today, it must be possible for statesman- 
ship to bring unemployed labor into union with unemployed land and 
capital, and so absorb any surplus which might result from decasual- 
ization." {Unemployment, London, 191 1, pp. 141-2.) 

Beveridge goes into a somewhat more detailed argument to prove 
that " unemployment cannot be attributed to any general want of ad- 
justment between the growth of the supply of labor and the growth of 
the demand." {Unemployment, London, 1912, p. 11.) The orthodox 
economic arguments are brought forward to show that not only is there 
a general dependence of the supply of population upon demand, but a 



155] CONTEMPORARY AMERICAN THEORIES 155 

probably the greatest obstacle to their assimilation, as well 
as the chief cause of their alleged intensification of the 
problem of unemployment. It is again merely the question 
of labor-market organization, of adjusting supply to de- 
mand, geographically and occupationally. Especially is this 
occupational or qualitative maladjustment due to the influx 
of immigrants to be noted. For the question of industrial 
training as a means of providing a labor force qualitatively 
adapted to the industrial needs of the country is peculiarly 
pertinent to the immigration situation. The need of an 
agency for the geographical distribution of immigrants has 
long been felt. The Immigration Act of February 20, 1907, 
provided for the establishment of a division of information 
designed " to promote a beneficial distribution of aliens 
admitted into the United States among the several States 
and Territories desiring immigration." * For this purpose 
the division is to " gather from all available sources useful 
information regarding the resources, products, and physical 
characteristics of each State and Territory, and shall pub- 
lish such information in different languages, and distribute 
the publications among all admitted aliens." The work has 
been carried on with a fair degree of success, especially in 
the direction of immigrants to agricultural positions. 2 In 

more immediate dependence of the demand upon the supply (p. 5). 
Secondly, Beveridge shows that there are not too many men in Eng- 
land for the available land, the depopulation of the rural districts 
proving the fact. That the wealth of the country and the productivity 
per head of the population continue to increase is further proof that 
there is no over-population, for that would mean that the law of dimin- 
ishing returns had come to apply to labor generally. Finally, the rising 
reward to labor, the fact that its price is rising nominally and relatively, 
is held to show conclusively that there is no superabundance of labor 
and no tendency for labor to become of decreasing importance as a 
factor in production (pp. 8-10). 

1 Immigration Act of February 20, 1907, section 40. 

2 For details of the workings of the Division of Information, includ- 



156 CONTEMPORARY THEORIES OF UNEMPLOYMENT [156 

19 14, in response to a widespread feeling that a national 
system of labor exchanges was needed, the Division of In- 
formation of the Bureau of Immigration attempted to 
widen the scope of its work by the establishment of a 
nation-wide system of placement bureaus, post-offices 
throughout the country being utilized as offices. The at- 
tempt was rather Unfortunate, there being no adequate 
preparations made, a trained staff being lacking, and the 
post-offices being unfitted for such work. 1 

This question of the distribution of immigrants has re- 
ceived considerable attention in the literature on immigra- 
tion, and, as well, in that on unemployment. The Immi- 
grants in America Review 2 has featured it, Frances Kellor 3 
has emphasized it, Peter Roberts 4 and Frederic Haskin 6 
devote space to it. The disorganization of our immigrant 
labor market and the chaotic conditions prevailing in this one 
industrial field have been brought sharply home to the 
United States. Fortunately, the attack on disorganization 
here appears to be leading to a campaign against the more 
important maladjustments prevailing over the whole field 
of labor placement. 6 

ing statistics of distribution, see the Reports of the Chief of the Divi- 
sion, appearing in the Annual Reports of the Commissioner General of 
Immigration. 

*A "conference on employment" for the furtherance of this plan 
was held at San Francisco in August 1915, under the auspices of the 
United States Department of Labor. A report of the proceedings ap- 
pears in the Monthly Review of the United States Bureau of Labor 
Statistics, October 1915 (vol. i, no. 4). 

2 Cf. especially The Immigrants in America Review for March 1915 
(vol. i, no. 1). 

8 Out of Work, pp. 1 10-148. 

* The New Immigration (New York, 1912), pp. 63-66. 

5 The Immigrant (New York, 1913), pp. 92-99. 

6 Cf. also in connection with immigrant distribution : New York, 



157] CONTEMPORARY AMERICAN THEORIES 157 

3. THE FLOATING LABORER 

A second element in the unemployment situation which 
is found in an exceptionally aggravated form in the United 
States is the problem of the floating laborer. Its magnitude 
and importance, and something of its fundamental nature 
are just beginning to be understood. The United States 
Commission on Industrial Relations reports : " There are 
large numbers of American workers, in all probability sev- 
eral millions, who are not definitely attached either to any 
particular locality or to any line of industry." 1 Samuel 
Gompers, president of the American Federation of Labor, 
stated to that body : " The lot of the migratory laborer in 
the United States today is in some points worse than slav- 
ery. . . . The very large proportion of unskilled or casual 
workers who at the present time usually find employment 
only on short jobs or at seasonal work suffer a precarious 
existence. As they move from place to place they often go 
hungry, and while at work their food is usually of a poor 
quality, ill prepared. . . . The character of much of the 
work performed in the United States does not permit of 
steady employment of a regular body of men. ... In all, 
it is difficult to estimate how many men are thus living in 
the United States today, but the number reaches into the 
millions." 2 

First Annual Report of the. Bureau of Industries and Immigration, ign 
(Albany, 1912), pp. 33-42; New York, Report of the Commission of 
Immigration (Albany, 1909), pp. 109-128. United States Bureau of 
Labor, Italian, Slavic and Hungarian Unskilled Immigrant Laborers 
in the United States, Bulletin No. 72 (Washington, September 1907), 
pp. 403-486; Massachusetts, Report of the Commission on Immigration 
(Boston, 1914), pp. 37-53- 

1 United States Commission on Industrial Relations, Final Report 
(Washington, 1915), p. 156. 

1 Quoted, Fifteenth Biennial Report of the Bureau of Labor Statis- 
tics of California, 1911-1912 (iSacramento, 1912), pp. 40-50. 



I5 8 CONTEMPORARY THEORIES OF UNEMPLOYMENT [158 



This problem of the migratory worker — a problem aris- 
ing out of the seasonal character of the nation's industries 
and the country's wide geographical extent — is closely in- 
terwoven with the allied questions of the tramp and vagrant. 
In the first place, the line of cleavage between these classes 
at any one time cannot be clearly drawn. The tramp and 
the vagrant work at times ; conversely the migratory worker 
is likely to beg or steal at times. Numerous classifications, 
however, have been made, all with a doubtful degree of 
precision. Alice Solenberger 1 divides " tramps " into 
those wandering continuously, those wandering only at par- 
ticular times or seasons, and those wandering periodically 
with long intervals of regular life between. Edmond Kelly 
makes four divisions : youths under twenty-one who tramp 
for amusement; able-bodied workers and misdemeanants; 
neuropaths; the non-able-bodied. 2 These classifications, 

1 One Thousand Homeless Men (New York, 1911), pp. 209-238. 

2 The Elimination of the Tramp (New York, 1908), pp. 9-1 1. Kelly 
includes in an appendix (pp. 103-107) several other classifications. 
Picturesque, and at the same time having a great element of truth, is 
that of Dr. Reitman, who is himself a tramp : 

f (1) Tramp. 
(a) Dreams and wanders. 
(&) Trampdom — Main lines 

of railroads, 
(c) Runaway boy. 



Vagrants 

or penniless 

wanderers. 

Every species 

is itself 

subclassified 

according to 

(a) Character, 

(b) Geographical 

distribution, 

(c) Type. 



Tramp criminal. 
Criminal tramp. 
Neuropathic tramp. 



(2) Hobo. 

(a) Works and wanders. 

(b) Hoboland — farms, ice- 
houses, section houses, 
mines, etc. 

(c) Non-employed. 

(3) Bum. 

(a) Drinks and wanders. 
(&) Bumville — barrel-houses 

and saloons, 
(c) Drunkard. 



Tramp hobo. 
Train hobo. 
Bum hobo. 
Criminal hobo. 
Neuropathic hobo. 



Criminal bum. 
Neuropathic bum. 



159] CONTEMPORARY AMERICAN THEORIES 159 

made by persons in whose work the tramp proper has 
bulked large, tend to minimize the very large proportion of 
wandering workers proper. 

In a second way is the problem of the migratory laborer 
interlocked with those of the tramp and vagrant. For the 
path downwards is easy to travel, and a large number of 
the best type of laborer have gone over it. The Indus- 
trial Relations Commission traces their course. " Young 
men, full of ambition and high hopes for the future, start 
their life as workers, but, meeting failure after failure in 
establishing themselves in some trade or calling, their am- 
bitions and hopes go to pieces, and they gradually sink into 
the ranks of the migratory and casual workers. Continuing 
their existence in these ranks, they begin to lose self- 
respect and become ' hoboes/ Afterwards, acquiring cer- 
tain negative habits, as those of drinking or begging, and 
losing all self-control, self-respect, and desire to work, they 
become ' down-and-outs ' — tramps, bums, vagabonds, gam- 
blers, pickpockets, yeggmen, and other petty criminals — 
in short, public parasites, the number of whom seems to be 
growing faster than the general population." * Though 
this picture is somewhat overdrawn, the tendency to sink 
is undoubtedly ever present in the life of the migratory 
worker. 

The strongest, perhaps, of the forces serving to push the 
migratory laborer down into the ranks of the non-workers, 
to increase the irregularity of his working periods, and 
thus to intensify the normal problem of unemployment, has 
been the condition of the camps in which this class of 

1 United States Commission on Industrial Relations, Final Report, 
p. 157. Will Irwin has sketched this descent graphically, basing his 
articles on the findings of Peter A. Speak, who covered the field of 
migratory labor for the Industrial Relations Commission. Cf. " The 
Floating Laborer," Saturday Evening Post, May 9, June 6, July 4, 1914. 



I $0 CONTEMPORARY THEORIES OF UNEMPLOYMENT [t6o 

worker has been housed. The flare-up at Wheatland in 
August, 191 3, first drew the attention of California to the 
character of these camps. 1 The resulting investigation 
throughout the state disclosed intolerably filthy and in- 
sanitary conditions in a large percentage of such quarters. 2 
Nor has California been alone in this regard. Leiserson, as 
superintendent of the Wisconsin public employment offices, 
attributed in part to camp conditions the fact that men re- 
fused to take work offered them. 3 Conditions similar to 
those in California are noted in New York, 4 and in the 
Middle- West. 5 The relation of these conditions to irregu- 
larity of employment seems to be directly proved by statis- 
tical evidence, for the labor " turnover " varies roughly 
throughout California in accordance with the character of 
the living quarters provided in the different seasonal occu- 
pations. A " turnover " of 100 per cent (complete replace- 
ment of the labor force) in a two-week period is not un- 
common in certain of the railroad and lumber camps of the 
state ; in exceptional cases the period has been even briefer. 8 

1 Cf. Carleton H. Parker, " The Wheatland Riot," in The Survey, 
March 21, 1914 (vol. 31, no. 25), pp. 768-770. 

2 For statistics on this subject, cf. The First Annual Report of the 
Commission of Immigration and Housing of California (Sacramento, 
1915). 

3 American Labor Legislation Review, Feb. 1913 (vol. iii, no. 1), p. 
132. 

4 Report of the Commission of Immigration of the State of New 
York (Albany, 1909), pp. 126-128. 

5 Chicago, Report of the Mayor's Commission on Unemployment, pp. 
69-72. 

For further descriptions of the working conditions of the migra- 
tory laborers, cf. Frances A. Kellor, Out of Work, chapter on " Immi- 
gration and Unemployment," passim; Peter Roberts, The New Immi- 
gration, pp. 66-69. 

6 Cf. Carleton H. Parker, " The California Casual and His Revolt," 
Quarterly Journal of Economics, November, 1915 (vol. 30, no. 1), pp. 
1 19-122. 



l6l] CONTEMPORARY AMERICAN THEORIES 161 

With dirty quarters, hard work, poor food, and long hours 
to contend with, it is not to be wondered that the descent 
into shiftlessness, vagrancy, and crime is so easy. 

The mode of treatment of migratory persons has been 
indicated above in the consideration of the tramp and 
vagrancy legislation of the various states. Beyond this re- 
pressive type of relief no comprehensive attempt to deal 
with the various types of migratory wanderers and with the 
underlying industrial causes has been made. Certain states 
have started the cleaning-up of their labor camps; New 
York State has established a farm colony for the purpose 
of regenerating the fallen ones of this class; the scattered 
public employment offices represent a commencement of the 
task of organizing and directing the movements of labor. 
But those who have studied the situation look to deeper- 
going measures for a possible solution of the various prob- 
lems involved. In addition to making recommendations 
for a national system of labor exchanges, and an intelligent 
distribution of public work, the Federal Industrial Rela- 
tions Commission proposes that cheap transportation be pro- 
vided, that the stealing of rides be eliminated, that cheap 
workingmen's hotels be established, and that state and fed- 
eral farm colonies be provided for the rehabilitation of 
these men. 1 Alice Solenberger details a set of institutions, 
including compulsory farm colonies, for the treatment of 
the degenerate in these classes. 2 The case for compulsory 
farm colonies is put most strongly by Edmond Kelly, 3 who 
devotes his entire book to the explanation of that type of 
solution. Kelly, it must be noted, is concerned primarily 
with the tramp, the " won't work," and does not attempt to 
deal with the deeper economic factors. 

1 Final Report, pp. 159-160. 

2 One Thousand Homeless Men, pp. 235-236. 

3 The Elimination of the Tramp (New York, 1908). 



2^2 CONTEMPORARY THEORIES OF UNEMPLOYMENT [162 

The problem of the migratory worker and the migratory 
vagrant, important as it is in the American situation, has not 
as yet been adequately studied. A conception of its im- 
portance is dawning upon social thinkers. The survey has 
yet to be made which will point the way to a definite attack 
and a definite solution. 



CHAPTER V 
Conclusion 

Throu.gh all the diverse opinions * as to the causes of 
unemployment and as to what should be done to remedy 
the situation, the central theme of industrial disorganiza- 
tion runs. " . . . The nineteenth century," two students of 
an allied problem state, " left the twentieth an unenviable 
legacy — the legacy of an industrial system which had grown 
up without forethought, and whose maladies had been 
treated with spasmodic doses of medicine, administered in 

1 Space and time limitations have made it necessary to merely men- 
tion certain of the less orthodox and less widely accepted theories of 
unemployment. From the contention of the extreme individualist that 
". . . it is the imperfect development of competition, broadly con- 
ceived, in relation to the intricate economic circumstances with which 
it has to cope, that accounts for proficient people being without occu- 
pation" (S. J. Chapman, in Brassey-Chapman, Work and Wages, vol. 
ii, " Wages and Employment," pp. 349-350) to the attitude of the 
socialist who looks upon unemployment as " co-extensive with the capi- 
talist system "(John Spargo, " Socialism as a Cure for Unemployment," 
in Annals of the American Academy of Political and Social Science, 
May 191 5, vol. 59, pp. 157-64) diverse theories run a wide course. 
The forty-year-old theory of Henry George and the more recent one 
of the Federal Industrial Relations Commission agree in placing land 
monopolization as a cause. The unjust distribution of income has been 
put forward as a basic reason. Politics, the sweating system, the pre- 
vailing wage system, sun spots, the tariff, convict labor, the minimum 
wage, child labor, the entrance of women into industry, "big busi- 
ness " — all have been pilloried as responsible for unemployment. Pos- 
sibly all have a connection, more or less remote, with the problem 
being considered, but the inclusion of a discussion of them in the 
present paper has been impossible. 

163] 163 



164 CONTEMPORARY THEORIES OF UNEMPLOYMENT [164 

a spirit of hopeful experiment rather than with any pro- 
found study of the needs of the system." x The necessary 
study of that disorganized condition is in process of being 
made. 

For complete knowledge of all the factors in the unem- 
ployment problem further investigation is needed. But the 
time when investigation should occupy the whole field is 
past. William Leiserson 2 has made an emphatic appeal for 
the next step — for action, for the carrying through of a 
program for the prevention of unemployment, for the out- 
lining of the necessary laws, for the devising of the needed 
administrative machinery. The path of remedial action is 
not yet entirely clear, but it has at least been blazed. Con- 
structive work, for which investigation has sufficiently 
paved the way, is the present need. 



1 Dunlap and Denman, English Apprenticeship and Child Labor 
(London, 1912), p. 309. 

1 " The Problem of Unemployment Today," Political Science Quar- 
terly, March 1916, pp. 23-4. 



APPENDIX I 

AMERICAN STATISTICS ON UNEMPLOYMENT 

(These references do not include publications later than the early- 
part of 1916, nor are they intended to be at all exhaustive for the 
period previous to that date. They are designed to suggest the general 
character of American statistics on unemployment, rather than to con- 
stitute a complete statement of all such statistics existing.) 

The earliest figures available on this subject are those gath- 
ered by the Massachusetts Bureau of Statistics of Labor in 
June and November, 1878, and published in the Tenth Annual 
Report of that Bureau. (Boston, January 1879, pp. 3-13.) 
Far more intensive in their nature are those compiled in con- 
nection with the Massachusetts censuses of 1885 and 1895. 
The former were published in the Eighteenth Annual Report 
of the Bureau of Statistics of Labor (Boston, December 
1887, pp. 1-294), the latter in the Massachusetts State Census 
of 1895. The 34th Annual Report of the Bureau of Statistics 
of Labor (Boston, March 1904, part ii, pp. 131-213) con- 
tains some data on the amount of unemployment at that time. 
The Annual Reports of the Chief of the Bureau of Statistics 
of Labor, from 1908 on, give figures as to the amount of un- 
employment among organized wage-earners. 

Statistics showing the amount of unemployment among 
members of trade unions in New York State have been pub- 
lished since 1897. In 1897 and 1898 these were published in 
the Annual Reports of the Bureau of Labor Statistics of that 
state. From 1899 to 19 13 they appeared quarterly in the 
Bulletin of the Bureau of Labor Statistics. Since September 
19 1 3, a special series of Bulletins on Unemployment have been 
issued, while more recently the issue of monthly Labor Market 
Bulletins has been begun. Though restricted in their scope 
to organized workers, they are valuable as indices to seasonal 
165] 165 



1 66 APPENDIX I [J66 

and cyclical fluctuations and other business changes. Though 
a compilation of individual causes of unemployment, such as 
lack of work, lack of material, weather, labor disputes, dis- 
ability, etc., is included, no investigation of the more funda- 
mental causes is attempted. 

The Report to the Legislature of the State of New York by 
the Commission Appointed . . . to Inquire into the Question 
of Employers' Liability and Other Matters — Third Report — 
Unemployment and Lack of Farm Labor (Albany, 191 1, pp. 
28-38) contains a summary of previous statistics on unem- 
ployment in New York State, together with additional mate- 
rial gathered by the Commission. 

The United States Census workers gathered data on un- 
employment in 1880, but lack of funds and doubt as to their 
reliability prevented their compilation. The census of 1890 
contains some material on the question. That of 1900 (volume 
on Occupations) deals at length with unemployment, but a 
warning as to the uncertain character of the findings is given, 
Similar data were gathered in 1910, but have not as yet been 
published. 

The Bulletin on Manufactures published by the United 
States Census contains general statistics of the number em- 
ployed by months. The Census of Manufactures of 1905 has 
information as to the numbers employed in all manufacturing 
industries in 1904, by months. 

The United States Bureau of Labor Statistics has done 
some work in this field, and is at present publishing valuable 
data. The 18th Annual Report of the United States Com- 
missioner of Labor (1903) details the amount of unemploy- 
ment among 25,440 families ; the material for this report was 
gathered during the years 1900-2. 

Of their later publications the following are valuable on 
this subject: 

Bulletin No. 10 (Miscellaneous Series No. 1, on Statistics 
of Unemployment and the Work of Employment Offices in the 
United States. Previous statistics from various sources are 
summarized. 



167] APPENDIX I 167 

Bulletin No. 116 (Women in Industry Series No. 1). 
Hours, Earnings and Duration of Employment in Selected 
Industries in the District of Columbia. 

Bulletin No. 119 (Women in Industry Series No. 2). 
Working Hours of Women in the Pea Canneries of Wis- 
consin. 

Bulletin No. 146 (Wages and Hours of Labor Series No. 
8). Wages and Regularity of Employment in the Dress and 
Waist Industry of New York City. 

Bulletin No. 14/ (Wages and Hours of Labor Series No. 9). 
Wages and Regularity of Employment in the Cloak, Suit, and 
Skirt Industry. (In New York City and Boston.) 

Bulletin No. 1/2 (Miscellaneous Series No. 10). Unem- 
ployment in New York City. 

Bulletin No. 182 (Women in Industry Series No. 8). Un- 
employment among Women in Department and Other Retail 
Stores in Boston, Mass. 

Bulletin No. 183 (Miscellaneous Series No. 12). Regular- 
ity of Employment in the Women's Ready-to-W ear Garment 
Industries. 

The Monthly Reviews which the Bureau has published since 
July 191 5, give scattering statistics on unemployment. 

The Bureau of Labor Statistics has been conducting in- 
vestigations on the "turn-over," concerned with the average 
term of employment, which will give statistical evidence in a 
field of unemployment largely untouched as yet. 

The Annual Reports of the United States Geographical 
Survey state the number of work days and idle days in the 
coal-mining industry in the United States. 

Similar information for the mines of the state of Illinois 
has been included in the annual Illinois Coal Report. 

Various of the state bureaus of labor statistics publish data 
as to the number employed by months in the different manu- 
facturing industries, and other scattered material touching on 
the problem. 

Reports of varying scope are- published by the public em- 
ployment offices, state and municipal. 



1 68 APPENDIX I [168 

The Monthly Labor Market Bulletin issued by the super- 
intendent of the state employment offices of Wisconsin gives 
a valuable summary of general conditions in that state. 

The American Federationist, the official organ of the Amer- 
ican Federation of Labor, published data concerning the 
amount of unemployment among organized workers, from 
1899 to 1909. The number unemployed each month, and the 
maximum and minimum numbers unemployed each year were 
given. Publication of this information was discontinued in 
1909 because of doubts as to its value. 

A census of the unemployed was made in Rhode Island in 
1908, covering the urban districts. The information gathered 
appeared in the 22nd Report of Industrial Statistics, Rhode 
Island, 1908. 

Figures on unemployment in Chicago are contained in two 
documents : The Report of the Mayor's Commission on Un- 
employment, Chicago, March 1914; Report of the Mayor 
and Aldermen by the Chicago Municipal Markets Commission 
on a Practical Plan for Relieving Destitution and Unemploy- 
ment in the City of Chicago. Chicago, December 28th, 1914. 

Some statistics on conditions in Portland, and in the rest of 
Oregon, are given in the Reed College Record, December 
1914, No. 18, A Study of the Unemployed, by Arthur Evans 
Wood. 

Of value as showing seasonal fluctuations in a particular 
industry is the Special Report of the Bureau of Labor Statis- 
tics of California on Labor Conditions in the Canning Indus- 
try (Sacramento, 1913). 

Statistical analyses of the irregularity of female employ- 
ment in various industries are included in an article by Irene 
Osgood Andrews, " The Relation of Irregular Employment 
to the Living Wage for Women," which appeared in The 
American Labor Legislation Review for June 191 5 (vol. v, 
no. 2), pp. 291-418. 

Data indicating the percentage of unemployment among 
wage-earners in fifteen cities of the United States during 
191 5 are given in an article by Royal Meeker, " Some Recent 



169] APPENDIX I 169 

Surveys of Unemployment," in Annals of the American Acad- 
emy of Political and Social Sciences, September 191 5 (vol. 
61), pp. 24-9. 

Scott Nearing gives a resume of some of the earlier statis- 
tics in " The Extent of Unemployment in the United States" — 
Quarterly Publications of the American Statistical Associa- 
tion, September 1909 (vol. ii, new series, no. 87), pp. 525-49. 

The sources of unemployment statistics in the United 
States are indicated in a paper read by W. M. Leiserson be- 
fore the International Conference on Unemployment. Cf. 
Compte Rendu de la Conference Internationale de Chomage 
(Paris, 191 1 ), vol. 2, rapport no. 15, " The Fight Against 
Unemployment in the United States." 



APPENDIX II 

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i;i] APPENDIX II iyi 

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173] APPENDIX II 173 

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United States Bureau of Labor, Bulletin No. 48, September 1903. 

. The Social Relief Work of the Salvation Army in the United 



I74 APPENDIX II [174 

States. In Monographs on American Social Economics. No. 20. 
1900. 

United States Commissioner of Labor. First Annual Report. 1886. 
" Industrial Depressions." 

Walker, F. A. Political Economy. New York, Holt, 1888. 

. The Wages Question. New York, Holt, 1886. 

Warner, Amos G. American Charities. New York, Crowell, 1908. 
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Willoughby, W. F. Employment Bureaus. In Monographs on Amer- 
ican Social Economics. No. 6. 1900. 

Wyckoff, W. A. The Workers. The West. New York, Scribner, 1898. 

(d) Tramp and Vagrancy Legislation 1 

TRAMP LAWS 

State. Revised Statutes of 

Alabama 1907 

Connecticut 1913 

Delaware 1879 

Indiana 1908 

Iowa 1902 

Maine 1903 

Maryland 1906 

Massachusetts 1903 

Mississippi 1904 

Nebraska 1907 

New Hampshire 1900 

New Jersey 1910 

New York 1911 

North Carolina 1905 

Ohio 1908 

Pennsylvania 1879 

Rhode Island 1896 

Vermont 1912 

VAGRANCY LAWS 

Alabama 1907 

Arizona 1901 

Arkansas 1911 

California 1912 

Colorado 1912 

Connecticut 1913 

Delaware 1861 

Florida 1907 

1 See page 130 for acknowledgment. 



175] APPENDIX II 175 

Georgia 1905 

Idaho 1908 

Illinois 1908 

Indiana 1908 

Iowa 1913 

Kansas 1905 

Kentucky : 1904 

Louisiana 1912 

Maryland 1914 

Massachusetts 1913 

Michigan 1913 

Minnesota 1913 

Mississippi 1904 

Missouri 1909 

Montana 1907 

Nebraska 1907 

Nevada 1912 

New Hampshire 1901 

New Jersey 1910 

New Mexico 1897 

New York 1914 

North Carolina 1908 

North Dakota 1913 

Ohio 1908 

Oklahoma 1910 

Rhode Island 1896 

South Carolina 1902 

South Dakota 1913 

Tennessee 1907 

Texas 1909 

Utah 1911 

Virginia 1912 

Washington 1909 

West Virginia 1913 

Wisconsin 191 1 

Wyoming 1899 

(e) Current American Theories 

Adams and Sumner. Labor Problems. New York, Macmillan, 1905. 

American Academy of Political and Social Science. Annals. Vol. 33, 
no. 1. Industrial Education. January 1909. 

. Vol. S3, no. 2. Labor and Wages. March 1909. 

. Vol. 59. American Industrial Opportunity. May 1915. 

. Vol. 61. America's Interests After the European War. Sep- 
tember 1915. 



1 76 APPENDIX II [ ! 76 

American Association for Labor Legislation. (American section In- 
ternational Association on Unemployment.) American Labor 
Legislation Review. (See all volumes. Publication commenced in 
January 191 1.) 

American Federationist. Passim. (See index to contents for the years 
1894-1914. Washington, 1915.) 

Andrews, John B. " A National System of Labor Exchanges." New 
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California. Bureau of Labor Statistics. Special Report. " Labor Con- 
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. Bureau of Labor Statistics. 15th Biennial Report. Sacra- 
mento, 1912. 

. Bureau of Labor Statistics. 16th Biennial Report. Sacra- 
mento, 1914. 

. Commission of Immigration and Housing. Report on Unem- 
ployment. (Supplement to First Annual Report.) Sacramento, 
December 9, 1914. 

. Commission of Immigration and Housing. First Annual Re- 

port. Sacramento, 1915. 

. Commission of Immigration and Housing. Report on Relief 

of Destitute Unemployed, 1914-15. Sacramento, 1915. 

. Commonwealth Club. Transactions, December 1914 (vol. 9, 



no. 13). Report on Unemployment. San Francisco, 1914. 

Chicago. Report to the Mayor and Aldermen by the Chicago Muni- 
cipal Markets Commission on a Practical Plan for Relieving Desti- 
tution and Unemployment in the City of Chicago. Chicago, De- 
cember 28, 1914. 

. Mayor's Commission on Unemployment. Report. Chicago, 

March, 1914. 

Commons, John R. Labor and Administration. New York, Macmil- 
lan, 1913. 

. Races and Immigrants in America. New York, Macmillan, 

1911. 

Commons, John R., and Andrews, John B. Principles of Labor Legis- 
lation. New York, Harper & Bros., 1916. 

Devine, Edward T. Misery and its Causes. New York, Macmillan, 

1913. 

. Report on the Desirability of Establishing an Employment 

Bureau in the City of New York. New York, Charities Publica- 
tion Co., 1909. 

Hall, Prescott F. Immigration. New York, Holt, 1913. 

Haskin, Frederic. The Immigrant. New York, Revell, 1913. 

Henderson, Charles R. Chicago — Report of the Mayor's Commission 
on Unemployment. Chicago, March 1914. 



l 7 y] APPENDIX II iyy 
. " The Struggle Against Unemployment." American Labor 



Legislation Review, May 1914 (vol. 4, no. 2). 

Hollander, Jacob H. The Abolition of Poverty. Boston, Houghton 
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Hourwich, Isaac A. " The Econqmic Aspects of Immigration." Po- 
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. I)n migration and Labor. New York, Putnam, 1912. 

Immigrants in America Review. March 191 5. New York. 

Irwin, Will. " The Floating Laborer." Saturday Evening Post, May 
9, June 6, July 4, 1914. 

Jenks, Jeremiah, and Lauck, W. Jett. The Immigration Problem. New 
York, Funk & Wagnalls, 191 3. 

Kellor, Frances A. Out of Work. New York, Putnam, 1905. 

. Out of Work. New York, Putnam, 1915. 

Kelly, Edmond. The Elimination of the Tramp. New York, Putnam, 
1908. 

Leiserson, W. M. " The Problem of Unemployment Today." Political 
Science Quarterly, March 1916 (vol. 31, no. 1). 

. " Public Employment Offices in Theory and Practice." Amer- 
ican Labor Legislation Review, May 1914 (vol. 4, no. 2). 

. " The Theory of Public Employment Offices and the Principles 

of their Practical Administration." Political Science Quarterly, 
March 1914. 

■ . Unemployment in the State of New York. New York, 191 1. 



(Including appendices to Report of New York Committee on Em- 
ployers' Liability, etc.) 

Massachusetts. Commission on Immigration. Report. Boston, 1914. 

. Director of the Bureau of Statistics. 46th Annual Report on 

the Statistics of Labor. Boston, 1915. 

Mitchell, John. Organised Labor. Philadelphia, American Book and 
Bible House, 1903. 

Mitchell, W. C. Business Cycles. University of California Press, 1913. 
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Nearing, Scott. Social Adjustment. New York, Macmillan, 1911. 

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Statistical Association. Quarterly Publications. September 1909. 
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1909 to Inquire into the Question of Employers' Liability and 
Other Matters. Third Report — Unemployment and Lack of Farm 
Labor. Albany, April 26, 191 1. 



178 APPENDIX II [ I7 g 

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. Industrial Commission. Bulletin. Issued Monthly. Albany, 

N. Y. 

Parker, Carleton H. " The California Casual and His Revolt." Quar- 
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Roberts, Peter. The New Immigration. New York, Macmillan, 1912. 

Rubinow, I. M. Social Insurance. New York, Holt, 1913. 

Seager, Henry R. Social Insurance — A Program of Social Reform. 
New York, Macmillan, 1910. 

Sheridan, F. J. " Italian, Slavic, and Hungarian Unskilled Immigrant 
Laborers in the United States." United States Bureau of Labor. 
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Solenberger, Alice. One Thousand Homeless Men. New York, Char- 
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United States Bureau of Labor Statistics. Monthly Review. July 1915 
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United States Commissioner General of Immigration. Annual Reports. 

United States Commission on Industrial Relations. Final Report. 
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United States Commission on Industrial Relations. First Annual Re- 
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United States Commission on Industrial Relations. Tentative Propo- 
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United States. Immigration Act of February 20, 1907. 

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United States Industrial Commission. Final Report. Washington, 1902. 

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VITA 

Frederick Cecil Mills was born on March 24, 1892, 
in Santa Rosa, California. He was educated in the public 
schools of Oakland, California, and at the University of 
California, receiving the degree of Bachelor of Letters 
from the latter institution in 19 14. During the year 1914- 
15 he served as investigator for the Commission of Immi- 
gration and Housing of California and for the United 
States Commission on Industrial Relations. His investi- 
gational work with these commissions was concerned with 
the related problems of unemployment, migratory labor, 
and immigration. During 191 5-16 he served as assistant 
in economics at the University of California, and carried 
on graduate study under Professors Carl C. Plehn, Jessica 

B. Peixotto, Stuart Daggett, and Carleton H. Parker. He 
acted as director of shelter and employment for the city of 
San Jose, California, during the winter of that year. In 
June 1 91 6, he received the degree of Master of Arts from 
the University of California. 

The academic year 191 6- 17 was spent in residence at 
Columbia University as Garth Fellow in Political Economy. 
His work in economics was under the direction of Profes- 
sors Edwin R. A. Seligman, Henry R. Seager, Wesley 

C. Mitchell, and Robert E. Chaddock. In addition, studies 
were carried on in philosophy under Professor John Dewey, 
and in anthropology under Professor Franz Boas. He 
attended the graduate seminar of Professors Seligman and 
Mitchell. 

179 



